The production supervisor of the Machining Department for Nell Company agreed to the following monthly static budget for the upcoming year:
CA_experts4uQuestion: The production supervisor of the Machining Departm...
[removed]The production supervisor of the Machining Department for Nell Company agreed to the following monthly static budget for the upcoming year:
| Nell Company Machining Department Monthly Production Budget | |
| Wages | $343,000 |
| Utilities | 25,000 |
| Depreciation | 41,000 |
| Total | $409,000 |
The actual amount spent and the actual units produced in the first three months of 2014 in the Machining Department were as follows:
| Amount Spent | Units Produced | |||
| January | $386,000 | 90,000 | ||
| February | 369,000 | 82,000 | ||
| March | 354,000 | 74,000 | ||
The Machining Department supervisor has been very pleased with this performance, since actual expenditures have been less than the monthly budget. 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 | 98,000 |
a. Prepare a flexible budget for the actual units produced for January, February, and March in the Machining Department. Assume depreciation is a fixed cost. Enter all amounts as positive numbers. If required, use per unit amounts carried out to two decimal places.
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9 years ago
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flexible_production_budget_nell_company.xlsx
