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$48,380

$47,280

$1,100

FavorableDirect labor57,820

54,520

3,300

FavorableIndirect materials25,960

26,060

100

UnfavorableIndirect labor21,240

20,790

450

FavorableUtilities20,650

20,510

140

FavorableMaintenance7,080

7,190

110

UnfavorableTotal variable181,130

176,350

4,780

FavorableFixed costsRent12,100

12,100

-0-

Neither Favorable nor UnfavorableSupervision19,000

19,000

-0-

Neither Favorable nor UnfavorableDepreciation7,300

7,300

-0-

Neither Favorable nor UnfavorableTotal fixed38,400

38,400

-0-

Neither Favorable nor UnfavorableTotal costs$219,530

$214,750

$4,780

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 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

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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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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