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?

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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

100%

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?

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.