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 Depreciation 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 117,000 107,000 96,000 May $503,000 483,000 460,000 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 532.000. However, the plant manager believes that the budget should not remain fixed for every month but should "tex" 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 Utility cost per direct labor hour Direct labor hours per unit 0.25 Planned monthly unit production 128,000 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 Line Item Description Machining Department Budget For the Three Months Ending July 31 Units of production 32,000 54,000 $532,000 Supporting calculations Units of production Hours per unit Tidal Hans Total hours of production Total hours of production Uity costs per hour Totalities Totalexible budget May July 117,000 107,000 96,000 Excess of actual cost over budget 117,000 107,000 b. Compare the flexible budget with the actual expenditures for the first three months June 96,000 May July
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 Depreciation 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 117,000 107,000 96,000 May $503,000 483,000 460,000 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 532.000. However, the plant manager believes that the budget should not remain fixed for every month but should "tex" 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 Utility cost per direct labor hour Direct labor hours per unit 0.25 Planned monthly unit production 128,000 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 Line Item Description Machining Department Budget For the Three Months Ending July 31 Units of production 32,000 54,000 $532,000 Supporting calculations Units of production Hours per unit Tidal Hans Total hours of production Total hours of production Uity costs per hour Totalities Totalexible budget May July 117,000 107,000 96,000 Excess of actual cost over budget 117,000 107,000 b. Compare the flexible budget with the actual expenditures for the first three months June 96,000 May July
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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: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
117,000
107,000
96,000
May
$503,000
483,000
460,000
June
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 532,000. 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
Utility cost per direct labor hour
Direct labor hours per unit
Planned monthly unit production
Total
$446,000
32,000
54,000
$532,000
Line Item Description
Units of production
Supporting calculations:
Units of production
Hours per unit
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
Total hours of production
Wages per hour
Total wages
Total hours of production
Utility costs per hour
Total utilities
Machining Department Budget
For the Three Months Ending July 31
May
June
117,000 107,000
$14.00
Total flexible budget
Actual cost
$1.00
0.25
Excess of actual cost over budget
128,000
117,000
xs
x S
107,000
x $
x S
b. Compare the flexible budget with the actual expenditures for the first three months.
June
July
96,000
May
96,000
July
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