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 $282,000 Utilities 20,000 Depreciation 34,000 Total $336,000 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 $318,000 74,000 February 306,000 68,000 March 292,000 61,000 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 $336,000. 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 $14.00 Utility cost per direct labor hour $1.00 Direct labor hours per unit 0.25 Planned monthly unit production 81,000 Question Content Area 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 DepartmentFlexible Production BudgetFor the Three Months Ending March 31 January February March Units of production fill in the blank 8e9691f9efd2fb1_1 fill in the blank 8e9691f9efd2fb1_2 fill in the blank 8e9691f9efd2fb1_3 Wages $fill in the blank 8e9691f9efd2fb1_4 $fill in the blank 8e9691f9efd2fb1_5 $fill in the blank 8e9691f9efd2fb1_6 Utilities fill in the blank 8e9691f9efd2fb1_7 fill in the blank 8e9691f9efd2fb1_8 fill in the blank 8e9691f9efd2fb1_9 Depreciation fill in the blank 8e9691f9efd2fb1_10 fill in the blank 8e9691f9efd2fb1_11 fill in the blank 8e9691f9efd2fb1_12 Total $fill in the blank 8e9691f9efd2fb1_13 $fill in the blank 8e9691f9efd2fb1_14 $fill in the blank 8e9691f9efd2fb1_15 Question Content Area b. Compare the flexible budget with the actual expenditures for the first three months. January February March Total flexible budget $fill in the blank 5fad71093f8204e_1 $fill in the blank 5fad71093f8204e_2 $fill in the blank 5fad71093f8204e_3 Actual cost fill in the blank 5fad71093f8204e_4 fill in the blank 5fad71093f8204e_5 fill in the blank 5fad71093f8204e_6 Excess of actual cost over budget $fill in the blank 5fad71093f8204e_7 $fill in the blank 5fad71093f8204e_8 $fill in the blank 5fad71093f8204e_9 What does this comparison suggest? The Machining Department has performed better than originally thought. The department is spending more than would be expected

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 $282,000 Utilities 20,000 Depreciation 34,000 Total $336,000 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 $318,000 74,000 February 306,000 68,000 March 292,000 61,000 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 $336,000. 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 $14.00 Utility cost per direct labor hour $1.00 Direct labor hours per unit 0.25 Planned monthly unit production 81,000 Question Content Area 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 DepartmentFlexible Production BudgetFor the Three Months Ending March 31 January February March Units of production fill in the blank 8e9691f9efd2fb1_1 fill in the blank 8e9691f9efd2fb1_2 fill in the blank 8e9691f9efd2fb1_3 Wages $fill in the blank 8e9691f9efd2fb1_4 $fill in the blank 8e9691f9efd2fb1_5 $fill in the blank 8e9691f9efd2fb1_6 Utilities fill in the blank 8e9691f9efd2fb1_7 fill in the blank 8e9691f9efd2fb1_8 fill in the blank 8e9691f9efd2fb1_9 Depreciation fill in the blank 8e9691f9efd2fb1_10 fill in the blank 8e9691f9efd2fb1_11 fill in the blank 8e9691f9efd2fb1_12 Total $fill in the blank 8e9691f9efd2fb1_13 $fill in the blank 8e9691f9efd2fb1_14 $fill in the blank 8e9691f9efd2fb1_15 Question Content Area b. Compare the flexible budget with the actual expenditures for the first three months. January February March Total flexible budget $fill in the blank 5fad71093f8204e_1 $fill in the blank 5fad71093f8204e_2 $fill in the blank 5fad71093f8204e_3 Actual cost fill in the blank 5fad71093f8204e_4 fill in the blank 5fad71093f8204e_5 fill in the blank 5fad71093f8204e_6 Excess of actual cost over budget $fill in the blank 5fad71093f8204e_7 $fill in the blank 5fad71093f8204e_8 $fill in the blank 5fad71093f8204e_9 What does this comparison suggest? The Machining Department has performed better than originally thought. The department is spending more than would be expected

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...

See similar textbooks

Question Content Area

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 DepartmentFlexible Production BudgetFor the Three Months Ending March 31

	January	February	March
Units of production	fill in the blank 8e9691f9efd2fb1_1	fill in the blank 8e9691f9efd2fb1_2	fill in the blank 8e9691f9efd2fb1_3
Wages	$fill in the blank 8e9691f9efd2fb1_4	$fill in the blank 8e9691f9efd2fb1_5	$fill in the blank 8e9691f9efd2fb1_6
Utilities	fill in the blank 8e9691f9efd2fb1_7	fill in the blank 8e9691f9efd2fb1_8	fill in the blank 8e9691f9efd2fb1_9
Depreciation	fill in the blank 8e9691f9efd2fb1_10	fill in the blank 8e9691f9efd2fb1_11	fill in the blank 8e9691f9efd2fb1_12
Total	$fill in the blank 8e9691f9efd2fb1_13	$fill in the blank 8e9691f9efd2fb1_14	$fill in the blank 8e9691f9efd2fb1_15

Question Content Area

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

	January	February	March
Total flexible budget	$fill in the blank 5fad71093f8204e_1	$fill in the blank 5fad71093f8204e_2	$fill in the blank 5fad71093f8204e_3
Actual cost	fill in the blank 5fad71093f8204e_4	fill in the blank 5fad71093f8204e_5	fill in the blank 5fad71093f8204e_6
Excess of actual cost over budget	$fill in the blank 5fad71093f8204e_7	$fill in the blank 5fad71093f8204e_8	$fill in the blank 5fad71093f8204e_9

What does this comparison suggest?

The Machining Department has performed better than originally thought.
The department is spending more than would be expected.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Niland Company Machining Department Monthly Production Budget
Wages	$282,000
Utilities	20,000
Depreciation	34,000
Total	$336,000

	Amount Spent	Units Produced
January	$318,000		74,000
February	306,000		68,000
March	292,000		61,000

Wages per hour	$14.00
Utility cost per direct labor hour	$1.00
Direct labor hours per unit	0.25
Planned monthly unit production	81,000