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.

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 Manufacturing Costs Budget Actual nor Unfavorable Variable costs Direct materials $51,600 $50,600 $1,000 Favorable Direct labor 56,400 53,600 2,800 Favorable Indirect materials 28,800 29,000 200 Unfavorable Indirect labor 22,800 22,380 420 Favorable Utilities 15,000 14,860 140 Favorable Maintenance 8,400 8,740 340 Unfavorable Total variable 183,000 179,180 3,820 Favorable Fixed costs Rent 12,200 12,200 -0-Neither Favorable nor Unfavorable Supervision 16,900 16,900 -0-Neither Favorable nor Unfavorable Depreciation 7,700 7,700 -0- Neither Favorable nor Unfavorable Total fixed 36,800 36,800 -0- Neither Favorable nor Unfavorable Total costs $219,800 $215,980 $3,820 Favorable (a) State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.) The formula iss + 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