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	$1,043,000
Utilities	43,000
Depreciation	71,000
Total	$1,157,000

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	$1,088,000		87,000
June	1,034,000		79,000
July	981,000		71,000

The Machining Department supervisor has been very pleased with this performance because actual expenditures for MayJuly have been significantly less than the monthly static budget of 1,157,000. 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	$22.00
Utility cost per direct labor hour	$0.90
Direct labor hours per unit	0.50
Planned monthly unit production	94,000

Static Budget versus Flexible Budget 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 Utilities $1,043,000 43,000 71,000 Depreciation Total $1,157,000 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 $1,088,000 June 1,034,000 July 981,000 87,000 79,000 71,000 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 1,157,000. 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: $22.00 Wages per hour Utility cost per direct labor hour $0.90 Direct labor hours per unit 0.50 Planned monthly unit production 94,000 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. If required, use per unit amounts carried out to two decimal places. Hagerstown Company Machining Department Budget For the Three Months Ending July 31 May June July Units of production 87,000 79,000 71,000 $ Total $ Supporting calculations: Units of production 87,000 79,000 71,000 Hours per unit Total hours of production Wages per hour Total wages $1 Total hours of production Utility costs per hour X Total utilities b. Compare the flexible budget with the actual expenditures for the first three months. May June July Total flexible budget $ $ Actual cost Excess of actual cost over budget $