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The production supervisor of the Machining Department for NilandCompany agreed to the following monthly static budget for theupcoming year:

Niland Company Machining Department Monthly Production Budget
Wages	$867,000
Utilities	52,000
Depreciation	87,000
Total	$1,006,000

The actual amount spent and the actual units produced in thefirst three months in the Machining Department were as follows:

	Amount Spent		Units Produced
January	$948,000		106,000
February	910,000		97,000
March	864,000		87,000

The Machining Department supervisor has been very pleased withthis performance because actual expenditures for January–March havebeen significantly less than the monthly static budget of1,006,000. However, the plant manager believes that the budgetshould not remain fixed for every month but should “flex” or adjustto the volume of work that is produced in the Machining Department.Additional budget information for the Machining Department is asfollows:

Wages per hour	$15
Utility cost per direct labor hour	$0.9
Direct labor hours per unit	0.5
Planned monthly unit production	116,000

a. Prepare a flexible budget for the actualunits produced for January, February, and March in the MachiningDepartment. Assume depreciation is a fixed cost. If required, useper unit amounts carried out to two decimal places.

Niland Company
Machining Department Budget
For the Three Months Ending March 31
	January	February	March
Units of production	106,000	97,000	87,000
Wages	$	$	$
Utilities
Depreciation
Total	$	$	$
Supporting calculations:
Units of production	106,000	97,000	87,000
Hours per unit	x	x	x
Total hours of production
Wages per hour	x $	x $	x $
Total wages	$	$	$
Total hours of production
Utility costs per hour	x $	x $	x $
Total utilities	$	$	$

b. Compare the flexible budget with the actualexpenditures for the first three months.

	January	February	March
Total flexible budget	$	$	$
Actual cost
Excess of actual cost over budget	$	$	$

What does this comparison suggest?

The Machining Department has performed better than originallythought.	Yes/No?
The department is spending more than would be expected.	Yes/No?

Please show work for each step.