Problem 22-3A (Part Level Submission)

Ratchet Company uses budgets in controlling costs. The August 2017 budget report for the companys Assembling Department is as follows.

RATCHET COMPANY Budget Report Assembling Department For the Month Ended August 31, 2017
			Difference
Manufacturing Costs	Budget	Actual	Favorable Unfavorable Neither Favorable nor Unfavorable
Variable costs
Direct materials	$50,020	$48,920	$1,100	Favorable
Direct labor	54,900	52,000	2,900	Favorable
Indirect materials	29,280	29,580	300	Unfavorable
Indirect labor	20,740	20,290	450	Favorable
Utilities	21,350	21,180	170	Favorable
Maintenance	7,320	7,590	270	Unfavorable
Total variable	183,610	179,560	4,050	Favorable
Fixed costs
Rent	12,800	12,800	0	Neither Favorable nor Unfavorable
Supervision	17,400	17,400	0	Neither Favorable nor Unfavorable
Depreciation	7,500	7,500	0	Neither Favorable nor Unfavorable
Total fixed	37,700	37,700	0	Neither Favorable nor Unfavorable
Total costs	$221,310	$217,260	$4,050	Favorable

The monthly budget amounts in the report were based on an expected production of 61,000 units per month or 732,000 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 59,000 units were produced.

(a) & (b)

(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.)

RATCHET COMPANY Assembling Department Flexible Budget Report For the Month Ended August 31, 2017
						Difference
		Budget		Actual Costs		Favorable Unfavorable Neither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs		$		$		$	FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs							FavorableUnfavorableNeither Favorable nor Unfavorable
DepreciationDirect LaborDirect MaterialsFixed CostsIndirect LaborIndirect MaterialsMaintenanceRentSupervisionTotal CostsTotal Fixed CostsTotal Variable CostsUnitsUtilitiesVariable Costs		$		$		$	FavorableUnfavorableNeither Favorable nor Unfavorable