The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year:

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

May $$1,600,00040,000$

June $1,950,00048,000$

July $2,200,00052,000$

The Machining Department supervisor has been very pleased with this performance because actual expenditures for May$$July have been significantly less than the monthly static budget of $$2,358,000.$ However, the plant manager believes that the budget should not remain fixed for every month but should $$flex$$ or adjust to the volume of work that is produced in the Machining Department. Additional budget information for the Machining Department is as follows:

Wages per hour $$25\mathrm{.}00$

Utility cost per direct labor hour $$0\mathrm{.}80$

Direct labor hours per unit $1\mathrm{.}5$

Planned monthly unit production $60,000$

a$.$Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a fixed cost.

b$.$Compare the flexible budget with the actual expenditures for the first three months. What does this comparison suggest?