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 materials Direct labor Indirect materials Indirect labor Utilities Maintenance $51,240 $50,240 $1,000 Favorable 56,120 52,920 3,200 Favorable 25,620 25,920 300 Unfavorable 21,960 21,560 400 Favorable 21,350 21,180 170 Favorable 7,320 7,760 440 Unfavorable Total variable 183,610 179,580 4,030 Favorable Fixed costs Rent Supervision Depreciation 10,600 10,600 0- Neither Favorable nor Unfavorable 18,500 18,500 0- Neither Favorable nor Unfavorable -0- Neither Favorable nor Unfavorable -0- Neither Favorable nor Unfavorable 6,900 6,900 Total fixed 36,000 36,000 Total costs $219,610 $215,580 $4,030 Favorable The monthly budget amounts in the report were based on an expected production of 61,000 units per month or 732,000 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 59,000 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 Flexible Budget Report For the Month Ended August 31, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs In September, 65,000 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, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs