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

Hagerstown Company

Machining Department

Monthly Production Budget

Wages $$916,000$

Utilities $52,000$

Depreciation $86,000$

Total $$1,054,000$

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 $$993,000105,000$

June $942,00095,000$

July $902,00086,000$

The Machining Department supervisor has been very pleased with this performance because actual expenditures for May$$July have been significantly less than the monthly static budget of $1,054,000.$ However, the plant manager believes that the budget should not remain fixed for every month but should $$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 $$16\mathrm{.}00$

Utility cost per direct labor hour $$0\mathrm{.}90$

Direct labor hours per unit $0\mathrm{.}50$

Planned monthly unit production $114,000$

Question Content Area

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. If required, use per unit amounts carried out to two decimal places.

b$.$ Compare the flexible budget with the actual expenditures for the first three months.