Question

RATCHET COMPANY Budget Report Assembling Department For the Month Ended August 31, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Manufacturing Costs Budget Actual Variable costs Direct matrials$51,600 $50,600 $1,000 Favorable Direct labor Indirect materials 28,800 29,000 200 Unfavorable Indirect labor Utilities Maintenance 56,400 53,600 2,800 Favorable 22,800 22,380 420 Favorable 15,000 14,860 140 Favorable 8,400 8,740340 Unfavorable Total variable 165,0o 183,000 179,180 3,820 Favorable Fixed costs Rent Supervision Depreciation 12,200 12,200 0-Neither Favorable nor Unfavorable 16,900 16,900 0 Neither Favorable nor Unfavorable 7,7007,700 -0Neither Favorable nor Unfavorable -0- Neither Favorable nor Unfavorable 36,800 36,800 Total fixed $219,800 $215,980 $3,820 Favorable Total costs 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 In September, 64,000 units were produced. Prepare the budget report using flexible budget data, assuming (1) each variable cost was 10% higher than its actual cost in August, and (2) fixed costs were the same in September as in August. (List variable costs before fixed costs.,) RATCHET COMPANY Assembling Department Flexible Budget Report For the Month Ended September 30, 2020 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Budget Actual Costs Click if you would like to Show Work for this question: Open Show Work

Answer 1

Solution:

Ratchet Company
Assembling Department
Flexible Budget Report
For the month ended September 30, 2020
Particulars	Budget	Actual Cost	Variance	Favorable / Unfavorable / Neither favorable nor unfavorable
Units	64000	64000
Variable costs:
Direct materials	$55,040.00	$55,660.00	$620.00	Unfavorable
Direct labor	$60,160.00	$58,960.00	$1,200.00	Favorable
Indirect materials	$30,720.00	$31,900.00	$1,180.00	Unfavorable
Indirect labor	$24,320.00	$24,618.00	$298.00	Unfavorable
Utilities	$16,000.00	$16,346.00	$346.00	Unfavorable
Maintenance	$8,960.00	$9,614.00	$654.00	Unfavorable
Total Variable Costs	$195,200.00	$197,098.00	$1,898.00	Unfavorable
Fixed Costs:
Rent	$12,200.00	$12,200.00	$0.00	Neither Favorable nor Unfavorable
Supervision	$16,900.00	$16,900.00	$0.00	Neither Favorable nor Unfavorable
Depreciation	$7,700.00	$7,700.00	$0.00	Neither Favorable nor Unfavorable
Total Fixed Costs	$36,800.00	$36,800.00	$0.00	Neither Favorable nor Unfavorable
Total Costs	$232,000.00	$233,898.00	$1,898.00	Unfavorable