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 64,000 units per month or 768,000 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 62,000 units were produced.

Questions:

c.)In September, 62,000 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.

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 $53,760 $52,760 $1,000 Favorable 61,440 58,340 3,100 Favorable 25,600 25,700 100 Unfavorable 19,200 18,730 470 Favorable 22,400 22,240 160 Favorable 7,680 7,940 260 Unfavorable Total variable 190,080 185,710_4,370 Favorable Fixed costs Rent 10,500 10,500 0- Neither Favorable nor Unfavorable 16,100 16,1000 Neither Favorable nor Unfavorable 340Ni Favorabie nor Depreciation Total fixed32,000 32,000 0 Neither Favorable nor Unfavorable Total costs $222,080 $217,710 $4,370 Favorable