redo Static Budget versus Flexible BudgetThe production supervisor of the Machining Department for Niland Company agreed to the following monthly static budget for the upcoming year:Niland CompanyMachining DepartmentMonthly Production BudgetWages$445,000Utilities27,000Depreciation45,000Total$517,000The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows:Amount Spent Units ProducedJanuary$487,000102,000February466,00093,000March445,00084,000The 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 517,000. However, the plantmanager 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 MachiningDepartment is as follows:Wages per hour$20Utility cost per direct labor hour$1.2Direct labor hours per unit0.2Planned monthly unit production112,000a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimalplaces. Niland CompanyMachining Department BudgetFor the Three Months Ending March 31JanuaryFebruaryMarchUnits of production102,00093,00084,000TotalSupporting calculations:Units of production102,00093,00084,000Hours per unitTotal hours of productionWages per hourTotal wagesTotal hours of productionUtility costs per hourTotal utilitiesb. Compare the flexible budget with the actual expenditures for the first three months.JanuaryFebruaryMarchTotal flexible budget24Actual costExcess of actual cost over budget$What does this comparison suggest?The Machining Department has performed better than originally thought.The department is spending more than would be expected.

Budgeting is the process of preparing financial statements to estimate the organization’s future…

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 $445,000 Utilities 27,000 Depreciation 45,000 Total $517,000 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 $487,000 102,000 February 466,000 93,000 March 445,000 84,000

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 $445,000 Utilities 27,000 Depreciation 45,000 Total $517,000 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 $487,000 102,000 February 466,000 93,000 March 445,000 84,000

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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