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

The monthly budget amounts in the report were based on an expected production of 59,000 units per month or 708,000 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 57,000 units 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 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 materials Direct labor Indirect materials Indirect labor Utilities Maintenance $50,740 $49,740 $1,000 Favorable 54,280 51,480 2,800 Favorable 25,960 26,260300 Unfavorable 22,420 21,940 480 Favorable 14,750 14,580 170 Favorable 5,900 6,120220 Unfavorable Total variable 174,050 170,120 3,930 Favorable Fixed costs Rent Supervision Depreciation 10,000 10,000 0- Neither Favorable nor Unfavorable 18,200 18,200 0- Neither Favorable nor Unfavorable 5,200 5,200 -0 Neither Favorable nor Unfavorable 33,400 33,400 0-Neither Favorable nor Unfavorable Total fixed Total costs $207,450 $203,520 $3,930 Favorable