Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the companys Assembling Department is as follows.

RATCHET COMPANY Budget Report Assembling Department For the Month Ended August 31, 2020
			Difference
Manufacturing Costs	Budget	Actual	Favorable Unfavorable Neither Favorable nor Unfavorable
Variable costs
Direct materials	$54,600	$53,500	$1,100	Favorable
Direct labor	63,700	60,600	3,100	Favorable
Indirect materials	31,200	31,400	200	Unfavorable
Indirect labor	19,500	19,100	400	Favorable
Utilities	19,500	19,370	130	Favorable
Maintenance	7,800	8,010	210	Unfavorable
Total variable	196,300	191,980	4,320	Favorable
Fixed costs
Rent	10,900	10,900	0	Neither Favorable nor Unfavorable
Supervision	17,800	17,800	0	Neither Favorable nor Unfavorable
Depreciation	7,000	7,000	0	Neither Favorable nor Unfavorable
Total fixed	35,700	35,700	0	Neither Favorable nor Unfavorable
Total costs	$232,000	$227,680	$4,320	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.

(b) Prepare a budget report for August using flexible budget data. (List variable costs before fixed costs.)

(c) 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.)

Assembling Department Flexible Budget Report For the Month Ended August 31, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs Units 63,000 63,000 Variable Costs Direct Materials 45,864 44,940 924 Unfavorable Direct Labor 62,426 59,388 3,038||Favorable X Indirect Materials 14,976 15,072 96 Unfavorable X Indirect Labor 5,850 5,730 120 Unfavorable X x Utilities 5,850 5,811 39|| : Unfavorable Maintenance 936 961.20 25.20 Unfavorable Total Variable Costs 135,902 131,902.20 3,999.80|| Unfavorable Fixed Costs Rent 10,900 10,9001 0 Neither Favorable nor Unfavorable v Supervision 17,800 17,800 ol Neither Favorable nor Unfavorable v Depreciation 7,000 7,000 Neither Favorable nor Unfavorable Total Fixed Costs 35,7001 35,700 ONeither Favorable nor Unfavorable v Total Costs 171,602 167,602.20 3,999.80 Unfavorable RATCHET COMPANY Assembling Department Flexible Budget Report For the Month Ended September 30, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs Units 69,000 69,000 Variable Costs x Direct Materials 50,450.40 49,434 1,016.40 Unfavorable X X Direct Labor 68,668.60 65,326.80 3,341,80 Favorable Indirect Materials 16,473.60 16,579.20 105.60 Unfavorable Indirect Labor 6,435 6,303 132|| Unfavorable X x Utilities 6,435 6,392.10 42.90|| Unfavorable X x X Maintenance 1,029.60 1,057.32 27.72 Unfavorable X Total Variable Costs 149,492.20 145,092.42 4,399.78||Unfavorable Fixed Costs Rent 10,900 10,900 0 Neither Favorable nor Unfavorable Supervision 17,800 17,800 ol Neither Favorable nor Unfavorable v Depreciation 7,000 7,000 0 Neither Favorable nor Unfavorable v Total Fixed Costs 35,700 35,700 0 Neither Favorable nor Unfavorable v X Total Costs 185,192.20 x...... 4,399.78 Unfavorable 180,792.42