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

Niland Company Machining Department Monthly Production Budget
Wages	$318,000
Utilities	19,000
Depreciation	32,000
Total	$369,000

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
January	$348,000		81,000
February	330,000		73,000
March	315,000		66,000

The Machining Department supervisor has been very pleased with this performance because actual expenditures for JanuaryMarch have been significantly less than the monthly static budget of 369,000. 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	$18
Utility cost per direct labor hour	$1.1
Direct labor hours per unit	0.2
Planned monthly unit production	88,000

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

Niland Company
Machining Department Budget
For the Three Months Ending March 31
	January	February	March
Units of production	81,000	73,000	66,000
Wages	$fill in the blank 8be787ff2f99022_2	$fill in the blank 8be787ff2f99022_3	$fill in the blank 8be787ff2f99022_4
Utilities	fill in the blank 8be787ff2f99022_6	fill in the blank 8be787ff2f99022_7	fill in the blank 8be787ff2f99022_8
Depreciation	fill in the blank 8be787ff2f99022_10	fill in the blank 8be787ff2f99022_11	fill in the blank 8be787ff2f99022_12
Total	$fill in the blank 8be787ff2f99022_13	$fill in the blank 8be787ff2f99022_14	$fill in the blank 8be787ff2f99022_15
Supporting calculations:
Units of production	81,000	73,000	66,000
Hours per unit	xfill in the blank 8be787ff2f99022_16	xfill in the blank 8be787ff2f99022_17	xfill in the blank 8be787ff2f99022_18
Total hours of production	fill in the blank 8be787ff2f99022_19	fill in the blank 8be787ff2f99022_20	fill in the blank 8be787ff2f99022_21
Wages per hour	x $fill in the blank 8be787ff2f99022_22	x $fill in the blank 8be787ff2f99022_23	x $fill in the blank 8be787ff2f99022_24
Total wages	$fill in the blank 8be787ff2f99022_25	$fill in the blank 8be787ff2f99022_26	$fill in the blank 8be787ff2f99022_27
Total hours of production	fill in the blank 8be787ff2f99022_28	fill in the blank 8be787ff2f99022_29	fill in the blank 8be787ff2f99022_30
Utility costs per hour	x $fill in the blank 8be787ff2f99022_31	x $fill in the blank 8be787ff2f99022_32	x $fill in the blank 8be787ff2f99022_33
Total utilities	$fill in the blank 8be787ff2f99022_34	$fill in the blank 8be787ff2f99022_35	$fill in the blank 8be787ff2f99022_36

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

	January	February	March
Total flexible budget	$fill in the blank 88754af5e025fec_1	$fill in the blank 88754af5e025fec_2	$fill in the blank 88754af5e025fec_3
Actual cost	fill in the blank 88754af5e025fec_4	fill in the blank 88754af5e025fec_5	fill in the blank 88754af5e025fec_6
Excess of actual cost over budget	$fill in the blank 88754af5e025fec_7	$fill in the blank 88754af5e025fec_8	$fill in the blank 88754af5e025fec_9

What does this comparison suggest?

The Machining Department has performed better than originally thought.
The department is spending more than would be expected.