RATCHET COMPANY Budget Report Assembling Department For the Month Ended August 31, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Manufacturing Costs Budget Actual Variable costs Direct materials $49,600 $ 48,500 $ 1,100 Favorable Direct labor 57,040 54,040 3,000 Favorable Indirect materials 27,280 27,580 300 Unfavorable Indirect labor 22,320 21,910 410 Favorable Utilities 15,500 15,390 110 Favorable Maintenance 7,440 7,630 190 Unfavorable Total variable 179,180 175,050 4,130 Favorable Fixed costs Rent 11,500 11,500 -0- Neither Favorable nor Unfavorable Supervision 17, 17,100 -O- Neither Favorable nor Unfavorable Depreciation 7,100 7,100 -O- Neither Favorable nor Unfavorable Total fixed 35,700 35,700 -0- Neither Favorable nor Unfavorable $ 214,880 $ 210,750 $4,130 Favorable Total costs The monthly budget amounts in the report were based on an expected production of 62,000 units per month or 744,000 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 60,000 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, eg. 1.25.) The formula is $ 35700 + variable costs of $ 2.89 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 Nei Budget Actual Costs no Units 60000 60000 Variable Costs Direct Materials $ 48000 i $ 48500 i $ 500 IN i Direct Labor 55200 i 54040 i 1160 Indirect Materials 26400 i 27580 i 1180 Indirect Labor 21600 i 21910 i 310 i Utilities 15000 i 15390 i 390 i Maintenance 7200 i 7630 i 430 i Total Variable Costs 173400 i 175050 i 1650 Fixed Costs Rent 11500 i 11500 i 0 Supervision 17100 i 17100 i 0 Depreciation 7100 i 7100 i 0 Total Fixed Costs 35700 35700 0 Total Costs $ 209100 i $ 210750 i $ 1650 1 e Textbook and Media Attempts: 3 of 5 used (c) In September, 66,000 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, 2020 Diffe Favo Unfav Neither nor Unf Budget Actual Costs Units Variable Costs Direct Materials $ $ Direct Labor Indirect Materials Indirect Labor Utilities Maintenance Total Variable Costs Fixed Costs Rent Supervision Depreciation Total Fixed Costs Total Costs $ $ $