a. Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places. Hagerstown Company Machining Department Budget For the Three Months Ending July 31 May June 116,000 105,000 Units of production 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 loodl x S X $ Total flexible budget Actual cost Excess of actual cost over budget 116,000 105,000 x $ $ x $ $ XS XS b. Compare the flexible budget with the actual expenditures for the first three months. May July 95,000 95,000 $ $ June $ July
a. Prepare a flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places. Hagerstown Company Machining Department Budget For the Three Months Ending July 31 May June 116,000 105,000 Units of production 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 loodl x S X $ Total flexible budget Actual cost Excess of actual cost over budget 116,000 105,000 x $ $ x $ $ XS XS b. Compare the flexible budget with the actual expenditures for the first three months. May July 95,000 95,000 $ $ June $ July
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Static Budget versus Flexible Budget
The production supervisor of the Machining Department for Hagerstown Company agreed to the following monthly static budget for the upcoming year:
Hagerstown Company
Machining Department
Monthly Production Budget
Wages
Utilities
Depreciation
Total
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
116,000
105,000
95,000
May
June
$885,000
63,000
105,000
$1.053.000
$995,000
946,000
907,000
July
The Machining Department supervisor has been very pleased with this performance because actual expenditures for May-July have been significantly less than the monthly static budget of 1,053,000. 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:
$14.00
$1.00
0.50
126,000
Wages per hour
Utility cost per direct labor hour
Direct labor hours per unit
Planned monthly unit production
Transcribed Image Text:a. Prepare
flexible budget for the actual units produced for May, June, and July in the Machining Department. Assume depreciation is a fixed cost. If required, use per unit amounts carried out to two decimal places.
Hagerstown Company
Machining Department Budget
For the Three Months Ending July 31
Units of production
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
Actual cost
Total flexible budget
X
X $
x $
Excess of actual cost over budget
May
116,000
What does this comparison suggest?
116,000 105,000
X
x $
$
June
105,000
x $
$
b. Compare the flexible budget with the actual expenditures for the first three months.
X
May
x $
July
95,000
95,000
$
June
$
July
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