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

Line Item Description Amount

Wages $$2,250,000$

Utilities $72,000$

Depreciation $36,000$

Total $$2,358,000$

The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows:

Month 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:

Line Item Description Amount

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 $60,000$

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.

Hagerstown Company

Machining Department Budget

For the Three Months Ending July $31$

Line Item Description May June July

Units of production $40,00048,00052,000$

Wages

$Wages

$1,500,000$

$Wages

$1,800,000$

$Wages

$1,950,000$

Utilities

Utilities

$48,000$

Utilities

$57,600$

Utilities

$62,400$

Depreciation

Depreciation

$36,000$

Depreciation

$36,000$

Depreciation

$36,000$

Total $Total

$1,584,000$

$Total

$1,893,600$

$Total

$2,048,400$

Supporting calculations:

Units of production $40,00048,00052,000$

Hours per unit x Hours per unit

x Hours per unit

x Hours per unit

Total hours of production Total hours of production

Total hours of production

Total hours of production

Wages per hour x $Wages per hour

x $Wages per hour

x $Wages per hour

Total wages $Total wages

$Total wages

$Total wages

Total hours of production Total hours of production

Total hours of production

Total hours of production

Utility costs per hour x $Utility costs per hour

x $Utility costs per hour

x $Utility costs per hour

Total utilities $Total utilities

$Total utilities

$Total utilities

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