The production supervisor of the Machining Department for Lei Company agreed to the following monthly static budget for the upcoming year: LEI COMPANY Machining Department Monthly Production Budget Wages $547,000 Utilities 42,000 Depreciation 69,000 Total $658,000 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 January $621,000 59,000 February 587,000 53,000 March 564,000 48,000 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 $17.00 Utility cost per direct labor hour $1.30 Direct labor hours per unit 0.50 hrs. Planned unit production 64,000 units 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, round per unit amounts to the nearest cent. LEI COMPANY Machining Department For the Three Months Ending March 31 January February March Units of production 59,000 53,000 48,000 Wages $fill in the blank fe9ec1fe9feafeb_1 $fill in the blank fe9ec1fe9feafeb_2 $fill in the blank fe9ec1fe9feafeb_3 Utilities fill in the blank fe9ec1fe9feafeb_4 fill in the blank fe9ec1fe9feafeb_5 fill in the blank fe9ec1fe9feafeb_6 Depreciation fill in the blank fe9ec1fe9feafeb_7 fill in the blank fe9ec1fe9feafeb_8 fill in the blank fe9ec1fe9feafeb_9 Total $fill in the blank fe9ec1fe9feafeb_10 $fill in the blank fe9ec1fe9feafeb_11 $fill in the blank fe9ec1fe9feafeb_12 b. Compare the flexible budget with the actual expenditures for the first three months. January February March Actual cost $fill in the blank c3f1cbfaefdaff5_1 $fill in the blank c3f1cbfaefdaff5_2 $fill in the blank c3f1cbfaefdaff5_3 Total flexible budget fill in the blank c3f1cbfaefdaff5_4 fill in the blank c3f1cbfaefdaff5_5 fill in the blank c3f1cbfaefdaff5_6 $fill in the blank c3f1cbfaefdaff5_8 $fill in the blank c3f1cbfaefdaff5_9 $fill in the blank c3f1cbfaefdaff5_10 What does this comparison suggest? Has the Machining Department performed better than originally thought? Is the department spending more than expected?
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.
The production supervisor of the Machining Department for Lei Company agreed to the following monthly static budget for the upcoming year:
LEI COMPANY Machining Department Monthly Production Budget |
|
Wages | $547,000 |
Utilities | 42,000 |
69,000 | |
Total | $658,000 |
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 | |||
January | $621,000 | 59,000 | ||
February | 587,000 | 53,000 | ||
March | 564,000 | 48,000 |
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 | $17.00 |
Utility cost per direct labor hour | $1.30 |
Direct labor hours per unit | 0.50 hrs. |
Planned unit production | 64,000 units |
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, round per unit amounts to the nearest cent.
LEI COMPANY | |||
Machining Department | |||
For the Three Months Ending March 31 | |||
January | February | March | |
Units of production | 59,000 | 53,000 | 48,000 |
Wages | $fill in the blank fe9ec1fe9feafeb_1 | $fill in the blank fe9ec1fe9feafeb_2 | $fill in the blank fe9ec1fe9feafeb_3 |
Utilities | fill in the blank fe9ec1fe9feafeb_4 | fill in the blank fe9ec1fe9feafeb_5 | fill in the blank fe9ec1fe9feafeb_6 |
Depreciation | fill in the blank fe9ec1fe9feafeb_7 | fill in the blank fe9ec1fe9feafeb_8 | fill in the blank fe9ec1fe9feafeb_9 |
Total | $fill in the blank fe9ec1fe9feafeb_10 | $fill in the blank fe9ec1fe9feafeb_11 | $fill in the blank fe9ec1fe9feafeb_12 |
b. Compare the flexible budget with the actual expenditures for the first three months.
January | February | March | |||
Actual cost | $fill in the blank c3f1cbfaefdaff5_1 | $fill in the blank c3f1cbfaefdaff5_2 | $fill in the blank c3f1cbfaefdaff5_3 | ||
Total flexible budget | fill in the blank c3f1cbfaefdaff5_4 | fill in the blank c3f1cbfaefdaff5_5 | fill in the blank c3f1cbfaefdaff5_6 | ||
$fill in the blank c3f1cbfaefdaff5_8 | $fill in the blank c3f1cbfaefdaff5_9 | $fill in the blank c3f1cbfaefdaff5_10 |
What does this comparison suggest?
Has the Machining Department performed better than originally thought? | |
Is the department spending more than expected? |
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