Question

CALCULATOR PRINTER VERSION BACK NEXT s Problem 22-JA (Part Level Submission) Ratchet Company uses budgets in controlling costs. The August 2017 budget report for the company's Assembling Department is as RATCHET COMPANY Budget Report Assembling Department For the Month Ended August 31, 2017 Difference Unfavorable Neither Favorable Hanufacturing Costs Budget Actual Variable costs Direct materials $50,740 549,740 $1,000 Favorable Direct labor 54,200 $1,400 2,800 Favorable Indirect materials 25,950 26,260 300 Unfavorable Indirect labor 22,420 21,940 480 Favorable 14,750 14,580 170 Favorable Maintenance 5.900 6120 220 Unfavorable Total variable 174,050 170.120 3.9.30 Favorable Fixed costs Rent 10,000 10,000 -- Neither Favorable nor Unfavorable Supervision 18,200 18.200 -0. Neither Favorable nor Unfavorable Depreciation 5,2005 ,200 -0. NetherFavorable nor Unfavorable Total fixed 33,400_35400 0 Neither Favorable nor Unfavorable Total costs $207,450 $203.520 53.930 Favorable The monthly budget amounts in the report were based on an expected production of 59,000 units per month or 700,000 units per year. The Assembling Department manager is pleased with the re at least praise for a job well done. The company president, however, is unhappy with the rest for August because only 57,000 unts were produced. (a) & (b) (a) state the total monthly budgeted cost formula (Round cost per unit to 2 decimal places, .g. 1.25.) The formula is + variable costs of perunt

Answer 1

(a) The formula is = $33,400 + variable cost of per unit

Fixed Cost =$33400

Variable Cost per unit:

= Total budgeted Variable Cost / Total expected output

=174050/59000

=$2.95 per unit

Flexible Budget Report
For the Month Ended August 31, 2017
	Budget	Actual Cost	Difference
			Favourable or Unfavourable or Neither Favourable nor Unfavourable
Units	57000	57000
Variable Cost:
Direct Material	49,020	49740	720	Unfavourable
Direct Labour	52,440	51480	960	Favourable
Indirect Material	25,080	26260	1,180	Unfavourable
Indirect Labour	21,660	21940	280	Unfavourable
Utilities	14,250	14580	330	Unfavourable
Maintenance	5,700	6120	420	Unfavourable
Total Variable Cost	168,150	170120	1,970	Unfavourable
Fixed Cost
Rent	10000	10000	-	Neither Favourable nor Unfavourable
Supervision	18200	18200	-	Neither Favourable nor Unfavourable
Depreciation	5200	5200	-	Neither Favourable nor Unfavourable
Total Fixed Cost	33400	33400	-	Neither Favourable nor Unfavourable
Total Cost	201,550	203,520	1970	Unfavourable

Budgeted direct material = (50740/59000)*57000=49020

Budgeted direct labor =(54280/59000)*57000=52440

Similarly, for the remaining heads also the calculation is same, ie, divide the respective budgeted cost (for 59000 Units) by 59000 and multiply by 57000

ANY DOUBTS OR CORRECTIONS?

JUST LEAVE A COMMENT BELOW

THANK YOU!