Ratchet Company uses budgets in controlling costs. The August 2020 budget report for the company's AssemblingDepartment is as follows. RATCHET COMPANY Budget Report Assembling Department For the Month Ended August31, 2020 Difference Manufacturing Costs Budget Actual Favorable Unfavorable Neither Favorable nor UnfavorableVariable costs Direct materials $51, 240 $50, 240 $1,000 Favorable Direct labor 56, 120 52, 920 3,200 Favorable Indirectmaterials 25, 620 25,920 300 Unfavorable Indirect labor 21,960 21, 560 400 Favorable Utilities 21,350 21, 180 170Favorable Maintenance 7,320 7,760 440 Unfavorable Total variable 183,610 179, 580 4,030 Favorable Fixed costs Rent10,600 10,600-0- Neither Favorable nor Unfavorable Supervision 18, 500 18,500 -0- Neither Favorable norUnfavorable Depreciation 6, 900 6,900 -0- Neither Favorable nor Unfavorable Total fixed 36,000 36,000-0- NeitherFavorable nor Unfavorable Total costs $219,610 $215, 580 $4,030 Favorable The monthly budget amounts in the reportwere based on an expected production of 61,000 units per month or 732, 000 units per year. The AssemblingDepartment manager is pleased with the report and expects a raise, or at least praise for a job well done. The companypresident, however, is unhappy with the results for August because only 59,000 units were produced. (a) State the totalmonthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.) The formula is $ + variable costsof $ 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

Flexible Budget: A flexible budget adapts to fluctuations in real revenue. Once an accounting period…

president, however, is unhappy with the results for August because only 59,000 units were produced. (a) State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.) The formula is $ + 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

president, however, is unhappy with the results for August because only 59,000 units were produced. (a) State the total monthly budgeted cost formula. (Round cost per unit to 2 decimal places, e.g. 1.25.) The formula is $ + 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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