P21-3A, State total budgeted cost formula, and prepare flexible budget reports for 2 time periods. Zelmer Company uses budgets in controlling costs. The August 2010 budget report for the company's Assembling Department is as follows.

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.