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	$48,000	$47,000	$1,000	Favorable
Direct labor	54,000	51,200	2,800	Favorable
Indirect materials	24,000	24,200	200	Unfavorable
Indirect labor	18,000	17,500	500	Favorable
Utilities	15,000	14,900	100	Favorable
Maintenance	12,000	12,400	400	Unfavorable
Total variable	171,000	167,200	3,800	Favorable
Fixed costs
Rent	12,000	12,000	0	Neither Favorable nor Unfavorable
Supervision	17,000	17,000	0	Neither Favorable nor Unfavorable
Depreciation	6,000	6,000	0	Neither Favorable nor Unfavorable
Total fixed	35,000	35,000	0	Neither Favorable nor Unfavorable
Total costs	$206,000	$202,200	$3,800	Favorable

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.

(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 Units 58000 58000 Variable Costs Direct Materials Unfavorable Direct Labor Favorable Indirect Materials Unfavorable Unfavorable Unfavorable Indirect Labor Utilities Maintenance Unfavorable Total Variable Costs Fixed Costs Rent Unfavorable Neither Favorable nor Unfavorable Neither Favorable nor Unfavorable Supervision Depreciation Total Fixed Costs Neither Favorable nor Unfavorable Neither Favorable nor Unfavorable Total Costs Unfavorable