Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the company's Assembling Department is as follows. RATCHET COMPANY Budget Report Assembling Department For the Month Ended August 31, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Actual Manufacturing Costs Budget Variable costs Direct materials $55.900 Direct labor 59.800 Indirect materials 26.000 $54,900 $1,000 Favorable 56,500 3,300 Favorable 26,100 100 Unfavorable Indirect labor 19.500 19,080 420 Favorable 160 Favorable Utilities 16,250 16.090 Maintenance 9.100 9.200 100 Unfavorable Total variable 186,550 181,870 4.680 Favorable Fixed costs Rent 11,200 11.200 -0- Neither Favorable nor Unfavorable -0- Neither Favorable nor Unfavorable Supervision 16,500 16,500 Depreciation 7,800 7,800 -O- Neither Favorable nor Unfavorable Total fixed 35.500 35,500 -O- Neither Favorable nor Unfavorable Total costs $222,050 $217,370 $4,680 Favorable The monthly budget amounts in the report were based on an expected production of 65,000 units per month or 780,000 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 63,000 units were produced. Question 12 of 15 -/10 E : (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 Assembling Department Flexible Budget Report For the Month Ended August 31, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs $ $ S >>> >>> >>> >>>>> $ $ S In September, 69,000 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 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Costs > S $ S LA > > S $ S