The production supervisor of the Machining Department for Nell Company agreed to
ID: 2470168 • Letter: T
Question
The production supervisor of the Machining Department for Nell Company agreed to the following monthly static budget for the upcoming year:
The actual amount spent and the actual units produced in the first three months of 2014 in the Machining Department were as follows:
The Machining Department supervisor has been very pleased with this performance, since actual expenditures have been less than the monthly budget. 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:
Nell CompanyMachining Department
Monthly Production Budget Wages $1,015,000 Utilities 48,000 Depreciation 80,000 Total $1,143,000 Nell Company-Machining Department Flexible Production Budget For the Three Months Ending March 31, 2014 January February March Units of production Wages Utilities Depreciation Total b. Compare the flexible budget with the actual expenditures for the first three months. January February March Total flexible budget Actual cost Excess of actual cost over budget What does this comparison suggest? The Machining Department has performed better than originally thought. The department is spending more than would be expected Select Select
Explanation / Answer
a)
Nelly company Machine Department
Flexible production budget
For the three months ended March 31, 2014
b. Comparing flexible budget with actual amounts for the first 3 months:
The Machineing Department has performed better than originally thought : NO
The Department is spending more than would be expected; NO
January February March Units production 98,000 89,000 80,000 wages ($) 9,39,000 853,500 768,000 Utilities ($) 44,400 40,350 36,300 Depreciation ($) 80,000 80,000 80,000 Total ($) 1,063,400 973,850 884,300Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.