Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the company's Assembling Department is as follows RATCHET COMPANY For the Month Ended August 31, 2020 Difference Favorable F Manufacturing Costs Budget Actual Unfavorable U Variable costs Direct materials $48,000 $47.000 $1,000 F Direct labor 54.000 51,200 2,800 F Indirect materials 24,000 24,200 200U Indirect labor 18,000 17,500 500 F Utilities 15,000 14,900 100 F Maintenance 12,000 12,400 400 U Total variable 171,000 167,200 3,800 F Fixed costs Rent 12,000 12,000 Supervision 17,000 17,000 Depreciation 6,000 6,000 Total fixed 35,000 35,000 Total costs $206,000 $202,200 $3,800 F -0- -0- -O- 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 Why does a flexible budget report provide a better basis for evaluating performance than the report based on static budget data? Difference Favorable F Unfavorable U Budget at 58,000 Units Actual Costs 58,000 Units Units Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance Total variable Fixed costs Rent Supervision Depreciation Total fixed $46,400 52,200 23,200 17.400 14,500 11,600 165,300 $47.000 51,200 24,200 17.500 14,900 12,400 167,200 $600U 1,000 F 1,000 U 100 U 400 U 800 U 1,900 12.000 17.000 6,000 35,000 $200,300 12,000 17,000 6,000 35,000 $202,200 OU OU 0 U OU $1,900 U Total costs BI T T O Word)