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Static Budget vs. Flexible Budget The production supervisor of the Machining Department for Lei Company agreed to the following monthly static budget for the upcoming year: LEI COMPANY Machining Department Monthly Production Budget Wages $1,440,000 92,000 Utilities Depreciation 32,500 Total $1,564,500 The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount Spent Units Produced January $1,200,000 February 1,356,000 75,000 85,000 90,000 March 1,425,000 The Machining Department supervisor has been very pleased with this performance, since actual expenditures have been less than the monthly budget. Howes plant manager believes that the budget should not remain fixed for every month but should "hexor adjust to the volume of work that is produced in the Mach Department. Additional budget information for the Machining Department is as follows: Wages per hour $18.00 Utility cost per direct labor hour $1.15 Direct labor hours per unit 0.0 hrs Previous Check My Work a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. Enter all amounts as positive numbers. LEI COMPANY Machining Department For the Three Months Ending March 31 January February March Units of production 75,000 85,000 90.000 Wages $ 1,000,000 $1,224.000 1.296,000 Ubilities Depreciation 32,500 1,181,500 1,334,700 $ 1.411,300 3. For each level of production, show wages, utilities, and depreciation. Calculate the total wages by multiplying number of units produced by hours per unit, then by wages per hour. Calculate the total utilities by multiplying the total hours of production by the utility cost per hour. b. Compare the flexible budget with the actual expenditures for the first three months. January February March Actual cost Total flexible budget What does this comparison suggest? What does this comparison suggest? Has the Machining Department performed better than originally thought? Is the department spending more than expected