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 Wages Utilities Depreciation Monthly Production Budget $1,125,000 90,000 50,000 $1,265,000 Total The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Units Produced Amount Spent $1,100,000 1,200,000 1,250,000 80,000 90,000 95,000 January February March The Machining Department supervisor has been very pleased with this performance because actual expenditures for January-March have been less than the monthly static budget of $1,265,000. 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 Utility cost per direct labor hour Direct labor hours per unit Planned monthly unit production 100,000 $15.00 $1.20 0.75