1. 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	$912,000
   Utilities	56,000
   Depreciation	92,000
   Total	$1,060,000

   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	$1,000,000		93,000
   February	948,000		84,000
   March	908,000		76,000

   The Machining Department supervisor has been very pleased with this performance because actual expenditures for JanuaryMarch have been significantly less than the monthly static An accounting device used to plan and control resources of operational departments and divisions.budget of 1,060,000. 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	0.5
   Planned monthly unit production	101,000

   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	93,000	84,000	76,000
   Research and development Advertising Rent Research and development Supplies Wages	$	$	$
   Rent Advertising Rent Research and development Supplies Utilities
   Depreciation Advertising Depreciation Rent Research and development Supplies
   Total	$	$	$
   Supporting calculations:
   Units of production	93,000	84,000	76,000
   Hours per unit	x	x	x
   Total hours of production
   Wages per hour	x $	x $	x $
   Total wages	$	$	$
   Total hours of production
   Utility costs per hour	x $	x $	x $
   Total utilities	$	$	$

   Feedback

   For each level of production, show wages, utilities, and depreciation.

   Learning Objective 2, Learning Objective 4.

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

   	January	February	March
   Total flexible budget	$	$	$
   Actual cost
   Excess of actual cost over budget	$	$	$

   What does this comparison suggest