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 551,200 $50,200 $1,000 Favorable Direct labor 57,500 54,200 3,400 Favorable Indirect materials 26,880 26,980 100 Unfavorable Indirect labor 19,200 18,740 460 Favorable Utilities 16,000 15,830 170 Favorable Maintenance 11,520 11,780 260 Unfavorable Total variable 182,400 177,730 4,670 Favorable Fixed costs Rent 11,200 11,200 -- Neither Favorable nor Unfavorable Supervision 18,300 18,300 -- Neither Favorable nor Unfavorable Depreciation 7,400 7,400 -- Neither Favorable nor Unfavorable Total fixed 36,900 36,900 -0- Neither Favorable nor Unfavorable Total costs $219,300 $ 214,630 54,670 Favorable The monthly budget amounts in the report were based on an expected production of 64,000 units per month or 768,000 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 62,000 units were produced. (a) & (b) Your answer is correct. (a) State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.) The formula is = 36909 - variable costs of 285 per unit. (b) 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, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs TUnits 62000 TVariable Costs Direct Materials 50200 600 Unfavorable TDirect Labor 49600 55800 260401 1600 Favorable Indirect Materials 26980 Indirect Labor 18600T U Utilities 940 unfavorable 140 unfavorable 3301 Unfavorable 520 Unfavorable 1030 Unfavorable Maintenance TTotal Variable Costs Fixed Costs Rent Neither Favorable nor Unfavorable y Supervision Neither Favorable nor Unfavorable Depreciation 7400T T Neither Favorable nor Unfavorable y Total Fixed Costs T ol Neither Favorable nor Unfavorable 36900 213600 3 6900 214630 Total Costs TUnfavorable Click if you would like to Show Work for this question: Open Show Work Your answer is partially correct. Try again. In September, 68,000 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 T Variable Costs Direct Materials 660 Unfavorable Direct Labor 1200 TFavorable Indirect Materials T. 28560 1 29678 Tunfavorable Indirect Labor T 20400 T TUnfavorable Utilities 7000l 363 T Unfavorable Maintenance Unfavorable Total Variable Costs 4657 T Unfavorable Fixed Costs Rent oT Neither Favorable nor Unfavorable TSupervision oT Neither Favorable nor Unfavorable Depreciation 7400 o Neither Favorable nor Unfavorable y TTotal Fixed Costs T 36900 3 6900 o Neither Favorable nor Unfavorable y Total Costs 230700 73800 4637 T Unfavorable Click if you would like to Show Work for this question: Open Show Work