Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume that depreciation is a fixed cost. Enter all amounts as positive numbers. If required, use per unit amounts carried out to two decimal places. Niland Company-Machining Department Flexible Production Budget For the Three Months Ending March 31   January February March Units of production fill in the blank f0aba0063fb9fa7_1 fill in the blank f0aba0063fb9fa7_2 fill in the blank f0aba0063fb9fa7_3 Wages $fill in the blank f0aba0063fb9fa7_4 $fill in the blank f0aba0063fb9fa7_5 $fill in the blank f0aba0063fb9fa7_6 Utilities fill in the blank f0aba0063fb9fa7_7 fill in the blank f0aba0063fb9fa7_8 fill in the blank f0aba0063fb9fa7_9 Depreciation fill in the blank f0aba0063fb9fa7_10 fill in the blank f0aba0063fb9fa7_11 fill in the blank f0aba0063fb9fa7_12 Total $fill in the blank f0aba0063fb9fa7_13 $fill in the blank f0aba0063fb9fa7_14 $fill in the blank f0aba0063fb9fa7_15 b.  Compare the flexible budget with the actual expenditures for the first three months.

Question

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 $283,000
Utilities 18,000
Depreciation 31,000
Total $332,000

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 $314,000   65,000  
February 299,000   59,000  
March 285,000   53,000  

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 $332,000. 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 $20.00
Utility cost per direct labor hour $1.30
Direct labor hours per unit 0.20
Planned monthly unit production 70,000

a.  Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume that depreciation is a fixed cost. Enter all amounts as positive numbers. If required, use per unit amounts carried out to two decimal places.

Niland Company-Machining Department
Flexible Production Budget
For the Three Months Ending March 31
  January February March
Units of production fill in the blank f0aba0063fb9fa7_1 fill in the blank f0aba0063fb9fa7_2 fill in the blank f0aba0063fb9fa7_3
Wages $fill in the blank f0aba0063fb9fa7_4 $fill in the blank f0aba0063fb9fa7_5 $fill in the blank f0aba0063fb9fa7_6
Utilities fill in the blank f0aba0063fb9fa7_7 fill in the blank f0aba0063fb9fa7_8 fill in the blank f0aba0063fb9fa7_9
Depreciation fill in the blank f0aba0063fb9fa7_10 fill in the blank f0aba0063fb9fa7_11 fill in the blank f0aba0063fb9fa7_12
Total $fill in the blank f0aba0063fb9fa7_13 $fill in the blank f0aba0063fb9fa7_14 $fill in the blank f0aba0063fb9fa7_15

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

 

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