Static Budget versus Flexible Budget The production supervisor of the Machining

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Static Budget versus Flexible Budget 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 Utilities Depreciatian 1,125,000 90,000 50,000 S1,265,000 Total The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows: Amount SpeUnits Produced $1,100,000 1,200,000 1,250,000 80,000 anuary February March The Machining Department supervisor has been very pleased with this performance because actual expenditures for January-March have been significantly less than the monthly static budget of $1,265,000. However, the plant manager belleves 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 n. 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 95,000 $15.00 $1.20 0.75 Niland Company-Machining Department Flexi ble Production Budget March 31 February For the Three Months En March 90,000 95,000 Units of production Wages Utilities 1.068.750 85,500 sD,o0o 900.000 V 72,00D S0,000 1.012.500 81,000 50,000

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Units of production               80,000                  90,000                  95,000 Hours per unit                         1                             1                             1 Total hours of production               60,000                  67,500                  71,250 Wages per hour $                   15 $                      15 $                      15 Total wages $        900,000 $        1,012,500 $        1,068,750 Total hours of production               60,000                  67,500                  71,250 Utility cost per hour $                     1 $                         1 $                         1 Total utilities $          72,000 $              81,000 $              85,500

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