Problem 22-3A (Part Level Submission) Ratchet Company uses budgets in controlling costs. The August 2017 budget report for the company's Assembling Department is as follows. RATCHET COMPANY Budget Report Assembling Department For the Month Ended August 31, 2017 Difference Favorable Unfavorable Neither Favorable Manufacturing Costs Budget Actual nor Unfavorable Variable costs Direct materials $50,840 $49,840 $1,000 Favorable Direct labor 55,800 52,500 3,300 Favorable Indirect materials 27,280 27,480 200 Unfavorable Indirect labor 18,600 18,180 420 Favorable Utilities 18,600 18,460 140 Favorable Maintenance 9,920 10,220 300 Unfavorable Total variable 181,040 176,680 4,360 Favorable Fixed costs Rent 11,700 11,700 -0- Neither Favorable nor Unfavorable Supervision 18,600 18,600 -0- Neither Favorable nor Unfavorable Depreciation 7,700 7,700 -0-Neither Favorable nor Unfavorable Total fixed 38,000 38,000 -0- Neither Favorable nor Unfavorable Total costs $219,040 $214,680 $4,360 Favorable The monthly budget amounts in the report were based on an expected production of 62,000 units per month or 744,000 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 60,000 units were produced. In September, 66,000 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, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs Units 66000 66000 Variable Costs Direct Materials $ $ Direct Labor Indirect Materials Indirect Labor Units Maintenance Total Variable Costs Fixed Costs Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs Units 66000 66000 Variable Costs Direct Materials