The production superviser of the Machining Department for Ni

The production superviser of the Machining Department for Niland Company agreed to the following monehly static budget for the upceming yea Nland Cempany Hachining Departmenlt Monthly Preduction Budget Wages peleas 5.123,0 $1,265.000 The a tual amount spent and the actual unts predod-tho first dree months·the Machining Department were as folows Ammount Spent Units Produced $1.100,000 Febnuary1.200000 Mardh 1.250.000 The Machining Department supervisar has been very pleased with this performans becaue ul penditunes for Jansary-March have been les chan the monthly static bodget of $1,265,000 Hoew. che plan manager bella he·???\" budget should not rw ain faed for \"very month but shoid nex ar atat to tho volume of wark that a produced in the Machi ng Depart ent Adde onal badget naarmanon for the Machining Department a as follows Wages per hour Ubility covt per direct laber hour$1.20 Direct labor hours per unit Planned mondhly unit production 100000 15.00

Solution

Flexible budget for actual units produced All amount in dollars January February March Unit is production 80000 90000 95000 wages 80000*0.75*15 = 900000 90000* 0.75*15 = 1012500 95000*0.75*15 = 1068750 Utilities 80000*0.75*1.20 = 72000 90000* 0.75* 1.20 = 81000 95000 *0.75*1.20 = 85500 Depreciation 50000 50000 50000 Total 1022000 1143500 1204250 Comparision January February March Total flexible budget 1022000 1143500 1204250 Actual cost 1100000 1200000 1250000 Excess of actual cost over budget 78000 56500 45750 The actual cost is higher side The machining department not performed as they thought The department spend more every month.