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 F Manufact Cost Actual Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities S 48,000 54,000 24,000 18,000 15,000 12,000 171,000 47,000 51,200 24,200 17,500 14,900 12,400 167,200 $1,000 F 2,800 F 200 U 500 F 100 F 400 U 3,800 F Total variable Fixed costs Rent Supervision Depreciation 12,000 17,000 6,000 35,000 12,000 17,000 6,000 35,000 Total fixed Total costs S 206,000 S 202,200 $3,800 F 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. Instructions (a) State the total monthly budgeted cost formula. (b) Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data? (c) In September, 64,000 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. NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". (a) State the total monthly budgeted cost formula Fixed cost Value + variable cost of Value per unit (b) Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data? RATCHET COMPANY Assembling department Flexible budget Report For the Month Ended t31, 2017 Budget at 58,000 units Actual Costs 58,000 units Difference Favorable F Unfavorable U Units Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Value Value Value Value Value Value Total variable Fixed costs Supervision Depreciation Total fxed Value Value Value Value Value Value Total costs Response: (c) In September, 64,000 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 Assembling department Flexible budget Report For the Month Ended September 30, 2017 Budget at 64,000 units Actual Costs 64,000 units Difference Favorable F Unfavorable U Units Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Total variable Fixed costs Supervision Depreciation Total fxed Value Value Value Value Value Value Value Value Value Total costs Response