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	$57,200	$56,100	$1,100	Favorable
Direct labor	61,100	57,600	3,500	Favorable
Indirect materials	26,000	26,100	100	Unfavorable
Indirect labor	24,700	24,300	400	Favorable
Utilities	19,500	19,330	170	Favorable
Maintenance	7,800	8,170	370	Unfavorable
Total variable	196,300	191,600	4,700	Favorable
Fixed costs
Rent	10,300	10,300	0	Neither Favorable nor Unfavorable
Supervision	18,300	18,300	0	Neither Favorable nor Unfavorable
Depreciation	6,800	6,800	0	Neither Favorable nor Unfavorable
Total fixed	35,400	35,400	0	Neither Favorable nor Unfavorable
Total costs	$231,700	$227,000	$4,700	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.