Problem 10-3A a, bi, c (Video) 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 Unfavorable Neither Favorable Manufacturing Costs Budget Actual nor Unfavorable Variable costs Direct materials $48,000 $47,000 $1,000 Favorable Direct labor 54,000 51,200 2,800 Favorable Indirect materials 24,000 24,200 200 Unfavorable Indirect labor 18,000 17,500 500 Favorable Utilities 15,000 14,900 100 Favorable Maintenance 12,000 12,400 400 Unfavorable Total variable 171,000 167,200 3,800 Favorable Fixed costs Rent 12,000 12,000 -O- Neither Favorable nor Unfavorable Supervision 17,000 17,000 -O-Neither Favorable nor Unfavorable Depreciation 6,000 6,000 -0-Neither Favorable nor Unfavorable Total fixed 35,000 35,000 -O-Neither Favorable nor Unfavorable Total costs $206,000 $202,200 $3,800 Favorable 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. (a) State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.) The formula is + variable costs of $ per unit. (b) Prepare a budget report for August using flexible budget data. (List variable costs before fixed costs.) (a) State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.) The formula is + variable costs of $ per unit. (6) Prepare a budget report for August using flexible budget data. (List variable costs before fixed costs.) RATCHET COMPANY Assembling Department Flexible Budget Report For the Month Ended August 31, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs 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 (List variable costs before fixed costs.) RATCHET COMPANY Assembling Department Flexible Budget Report For the Month Ended September 30, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs In September, 54,000 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) forced costs were the same in September as in August (List variable costs before fixed costs.) RATCHET COMPANY Assembling Department Flexible Budget Report For the Month Ended September 30, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs $ Click if you would like to Show Work for this question: Open Show Work
