Question

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 For the Month Ended August 31, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Manu 9 Costs Budget Actual Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance 49,560 $48,460 $1,100 Favorable 54,280 51,380 2,900 Favorable 28,320 28,420 100 Unfavorablke 18,880 18,420 460 Favorable 17,700 17,570 130 Favorable 9440 9.670 230 Unfavorable 178,180 173,920 4,260 Favorable Total variable Fixed costs Rent 10,000 10,000 Neither Favorable nor Unfavorable 18,800 18,800 0- Neither Favorable nor Unfavorable 7,400 7,400 -0-Neither Favorable nor Unfavorable 36,200 36,200 0- Neither Favorable nor Unfavorable Total fxed Total costs 214,380 S210,120 4,260 Favorable The monthly budget amounts in the report were based on an expected production of 59,000 units per month or 708,000 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 57,000 units were produced.

Answer 1

Hi,

I have solved the sums which required to compute flexible budget.