Problem 24-3A (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 nor Unfavorable Manufacturing Costs Budget Actual Variable costs Direct mils $51,600 $50,600 $1,000 Favorable Direct labor Indirect materials 28,800 29,000 200 Unfavorable Indirect labor Utilities Maintenance 56,400 53,600 2,800 Favorable 22,800 22,380 420 Favorable 15,000 14,860 140 Favorable 8,400 8,740 340 Unfavorable 183,000_179,180 3,820 Favorable Total variable Fixed costs Rent Supervision Depreciation 12,200 12,200 0- Neither Favorable nor Unfavorable 16,900 16,900 0- Neither Favorable nor Unfavorable 7,7007,700-0- Neither Favorable nor Unfavorable 36,800 36,800 0- Neither Favorable nor Unfavorable Total fixed Total costs $219,800 $215,980 $3,820 Favorable The monthly budget amounts in the report were based on an expected production of 60,000 units per month or 720,000 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 58,000 units were produced