The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year:
The actual amount spent and the actual units produced in the first three months in the Machining Department were as follows:
information for the Machining Department is as follows:
Wages per hour
Utility cost per direct labor hour $
Direct labor hours per unit
Planned monthly unit production
Hagerstown Company
Hagerstown Company Machining Department Budget
For the Three Months Ending July
tableLine Item Description,May,June,July
Units of production
Wages
Depreciation
Total
Supporting calculations:
Units of production
Hours per unit
Total hours of production
Wages per hour
Total wages
Total hours of production
Utility costs per hour
Total utilities
b Compare the flexible budget with the actual expenditures for the first three months.
Total flexible budget
Actual cost
Excess 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
