Question
Problem 23-03A a, b1, c Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the company's Assembling Department is as follows.
Problem 23-03A a, b1, c
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
Manufacturing Costs
Budget
Actual
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
Variable costsDirect materials$50,740
$49,740
$1,000
FavorableDirect labor54,280
51,480
2,800
FavorableIndirect materials25,960
26,260
300
UnfavorableIndirect labor22,420
21,940
480
FavorableUtilities14,750
14,580
170
FavorableMaintenance5,900
6,120
220
UnfavorableTotal variable174,050
170,120
3,930
FavorableFixed costsRent10,000
10,000
-0-
Neither Favorable nor UnfavorableSupervision18,200
18,200
-0-
Neither Favorable nor UnfavorableDepreciation5,200
5,200
-0-
Neither Favorable nor UnfavorableTotal fixed33,400
33,400
-0-
Neither Favorable nor UnfavorableTotal costs$207,450
$203,520
$3,930
Favorable
The monthly budget amounts in the report were based on an expected production of59,000units per month or708,000units per year. The Assembling Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The company president, however, is unhappy with the results for August because only57,000units were produced.
(a)State the total monthly budgeted cost formula.(Round cost per unit to 2 decimal places, e.g. 1.25.)
The formula is$
+ variable costs of $
per unit.
(b)Prepare 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
Budget
Actual Costs
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
$
$
$
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
$
$
$
Favorable
Unfavorable
Neither Favorable nor Unfavorable
LINK TO TEXT
LINK TO VIDEO
In September,63,000units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was10% 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
Budget
Actual Costs
Favorable
Unfavorable
Neither Favorable
nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
$
$
$
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
Favorable
Unfavorable
Neither Favorable nor Unfavorable
Depreciation
Direct Labor
Direct Materials
Fixed Costs
Indirect Labor
Indirect Materials
Maintenance
Rent
Supervision
Total Costs
Total Fixed Costs
Total Variable Costs
Units
Utilities
Variable Costs
$
$
$
Favorable
Unfavorable
Neither Favorable nor Unfavorable
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Accounting Principles
Authors: Jerry J. Weygandt, Paul D. Kimmel, Jill E. Mitchell
14th Edition
1119707110, 978-1119707110
