P10-3A State total budgeted cost formula, and prepare flexible budget reports for 2 time periods Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the company's Assembling Department is as follows. Ratchet Company Budget Report Assembling Department For the Month Ended August 31, 2020 Difference Favorable F Unfavorable U Budget Actual $ Manufacturing Cost Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable 48,000 54.000 24.000 18.000 15.000 12.000 171.000 47.000 51.200 24.200 17.500 14.900 12.400 167.200 $1,000 F 2.800 F -200 U 500 F 100 F -400 U 3.800 F Fixed costs Rent Supervision Depreciation Total fixed 12.000 17.000 6.000 35.000 12.000 17.000 6.000 35.000 OOOO Total costs $ 206,000 $ 202,200 $3,800 F per month The monthly budget amounts in the report were based on an expected production of 60,000 units or 720,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August The monthly budget amounts in the report were based on an expected production of 60,000 units per month or 720,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 58,000 units were produced. Instructions (a) State the total monthly budgeted cost formula. (b) Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data? (c) In September, 64,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August. (a) State the total monthly budgeted cost formula. Fixed cost Value variable cost of Value per unit (b) Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data? RATCHET COMPANY Assembling department Flexible budget Report For the Month Ended August 31, 2020 Budget at 58,000 units Actual Costs 58,000 units Units B/(W) F/U Variable costs Direct materials ? Value ? ? ? ? variable COSIS Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable ? ? ? ? ? ? ? Value Value Value Value Value Value ? ? ? ? ? Fixed costs Rent Supervision Depreciation Total fixed Value Value Value Value Value Value ? ? ? ? ? ? ? Total costs 2 ? Response: (C) In September, 64,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August, RATCHET COMPANY Assembling department Flexible budget Report For the Month Ended September 30, 2020 Budget at Actual Costs (d) Assume that the number of units produced in September changed to 68,000. Revise the flexible budget report for September assuming (1) each variable cost was 12% higher than its actual cost in August and (s) fixed costs remain the same in September as in August RATCHET COMPANY Assembling department Flexible budget Report For the Month Ended September 30, 2020 Budget at 68,000 units Units Actual Costs 68,000 units B/(W) F/U Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Fixed costs Rent Supervision Depreciation Total fixed Value Value Value ? Value Value Value ? Value Value Value ? Total costs ? ? ? 12724 P10-3A State total budgeted cost formula, and prepare flexible budget reports for 2 time periods Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the company's Assembling Department is as follows. Ratchet Company Budget Report Assembling Department For the Month Ended August 31, 2020 Difference Favorable F Unfavorable U Budget Actual $ Manufacturing Cost Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable 48,000 54.000 24.000 18.000 15.000 12.000 171.000 47.000 51.200 24.200 17.500 14.900 12.400 167.200 $1,000 F 2.800 F -200 U 500 F 100 F -400 U 3.800 F Fixed costs Rent Supervision Depreciation Total fixed 12.000 17.000 6.000 35.000 12.000 17.000 6.000 35.000 OOOO Total costs $ 206,000 $ 202,200 $3,800 F per month The monthly budget amounts in the report were based on an expected production of 60,000 units or 720,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August The monthly budget amounts in the report were based on an expected production of 60,000 units per month or 720,000 units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only 58,000 units were produced. Instructions (a) State the total monthly budgeted cost formula. (b) Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data? (c) In September, 64,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August. (a) State the total monthly budgeted cost formula. Fixed cost Value variable cost of Value per unit (b) Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data? RATCHET COMPANY Assembling department Flexible budget Report For the Month Ended August 31, 2020 Budget at 58,000 units Actual Costs 58,000 units Units B/(W) F/U Variable costs Direct materials ? Value ? ? ? ? variable COSIS Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable ? ? ? ? ? ? ? Value Value Value Value Value Value ? ? ? ? ? Fixed costs Rent Supervision Depreciation Total fixed Value Value Value Value Value Value ? ? ? ? ? ? ? Total costs 2 ? Response: (C) In September, 64,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August, RATCHET COMPANY Assembling department Flexible budget Report For the Month Ended September 30, 2020 Budget at Actual Costs (d) Assume that the number of units produced in September changed to 68,000. Revise the flexible budget report for September assuming (1) each variable cost was 12% higher than its actual cost in August and (s) fixed costs remain the same in September as in August RATCHET COMPANY Assembling department Flexible budget Report For the Month Ended September 30, 2020 Budget at 68,000 units Units Actual Costs 68,000 units B/(W) F/U Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Fixed costs Rent Supervision Depreciation Total fixed Value Value Value ? Value Value Value ? Value Value Value ? Total costs ? ? ? 12724