Question

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 $486,000 Utilities 37,000 Depreciation 62,000 Total $585,000 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 $553,000 105,000 February 526,000 95,000 March 506,000 86,000 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 $585,000. 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 $17.00 Ubility cost per direct labor hour $1.30 Check My Work Next 2 more Check My Work uses remaining Previous

Answer 1

			Jan	Feb	March
units of production			105,000	95,000	86,000
Wages			446250	403750	365500
Utilities			34125	30875	27950
Depreciation			49,000	49,000	49,000
total			529375	483625	442450
supporting calculations:
units of production			105,000	95,000	86,000
hours per unit			0.25	0.25	0.25
total hours of production			26250	23750	21500
Wages per hour			17	17	17
total wages			446250	403750	365500
total hours of production			26250	23750	21500
utility costs per hour			1.3	1.3	1.3
total utility			34125	30875	27950
b)			January	Feburary	March
Total Flexible Budget			529375	483625	442450
Actual cost			553,000	526,000	506,000
Excess of actual cost over budget			23,625	42,375	63,550
performed better than orginally thought					NO
Department is spending more					YES