The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year: Hagerstown Company Machining Department Monthly Production Budget Wages $407,000 Utilities 17,000 Depreciation 29,000 Total $453,000 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 May $427,000 89,000 June 407,000 81,000 July 387,000 73,000 The Machining Department supervisor has been very pleased with this performance because actual expenditures for May-July have been significantly less than the monthly static budget of 453,000. 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 $21.00 Utility cost per direct labor hour $0.90 Direct labor hours per unit 0.20 Planned montly unit production $7,000 A) Prepare a flexible Budgett for the actual units produced for May, June , and July in the Machining Department. Assume depreciation is a fixed cost. If required, use unit per unit amounts carried out to two decimal places: B) Compare the flexible budget with the actual expenditures for the first 3 months. Refer to the pictures for the templates of A and B.

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 1BE: At the beginning of the period, the Fabricating Department budgeted direct labor of 72,000 and...

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Question

The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year:

Hagerstown Company Machining Department Monthly Production Budget
Wages	$407,000
Utilities	17,000
Depreciation	29,000
Total	$453,000

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
May	$427,000	89,000
June	407,000	81,000
July	387,000	73,000

The Machining Department supervisor has been very pleased with this performance because actual expenditures for May-July have been significantly less than the monthly static budget of 453,000. 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	$21.00
Utility cost per direct labor hour	$0.90
Direct labor hours per unit	0.20
Planned montly unit production	$7,000

A) Prepare a flexible Budgett for the actual units produced for May, June , and July in the Machining Department. Assume depreciation is a fixed cost. If required, use unit per unit amounts carried out to two decimal places:

B) Compare the flexible budget with the actual expenditures for the first 3 months.

Refer to the pictures for the templates of A and B.