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Niland Company Machining Department Monthly Production Budget $272,000 17,000 28,000 $317,000 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 78.000 Wages Utilities Depreciation Total January $299,000 February 286,000 March 273,000 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 317,000. 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 71,000 64,000 $16 $1 0.2 85,000 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

Niland Company Machining Department Monthly Production Budget $272,000 17,000 28,000 $317,000 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 78.000 Wages Utilities Depreciation Total January $299,000 February 286,000 March 273,000 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 317,000. 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 71,000 64,000 $16 $1 0.2 85,000 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

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter8: Budgeting
Section: Chapter Questions
Problem 3E: Static budget versus flexible budget The production supervisor of the Machining Department for...
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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 Depreciation Total 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 February March $299,000 286,000 273,000 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 317,000. 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 Units production Wages Utilities Depreciation. 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 Total Supporting calculations: Units of production. Hours per unit Total hours of production Wages per hour Total wages Total hours of production. Utility costs per hour Total utilities. $272,000 17,000 28,000 $317,000 Supporting calculations: Units of production. Hours per unit Total hours Wages per hour production Total wages Total hours of production Utility costs per hour. Total utilities x S S 78,000 71,000 64,000 x $ $16 $1 0.2 85,000 January February March 78,000 71,000 64,000 S 78,000 78,000 x S s 71,000 S XS 71,000 January s 64.000 $ 64,000 b. Compare the flexible budget with the actual expenditures for the first three months. February 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. March
Transcribed Image Text: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 Depreciation Total 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 February March $299,000 286,000 273,000 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 317,000. 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 Units production Wages Utilities Depreciation. 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 Total Supporting calculations: Units of production. Hours per unit Total hours of production Wages per hour Total wages Total hours of production. Utility costs per hour Total utilities. $272,000 17,000 28,000 $317,000 Supporting calculations: Units of production. Hours per unit Total hours Wages per hour production Total wages Total hours of production Utility costs per hour. Total utilities x S S 78,000 71,000 64,000 x $ $16 $1 0.2 85,000 January February March 78,000 71,000 64,000 S 78,000 78,000 x S s 71,000 S XS 71,000 January s 64.000 $ 64,000 b. Compare the flexible budget with the actual expenditures for the first three months. February 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. March
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