(a) & (b)

(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 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 nor Unfavorable Manufacturing Costs Budget Actual Variable costs Direct materials Direct labor Indirect materials Indirect labor $54,600 $53,500 $1,100 Favorable 63,700 60,600 3,100 Favorable 31,200 31,400 200 Unfavorable 19,500 19,100 400 Favorable 19,500 19,370 130 Favorable 7,800 8,010 210 Unfavorable 196,300 191,980 4,320 Favorable Utilities Maintenance Total variable Fixed costs 10,900 Rent Supervision 10,900 17,800 17,800 -0- Neither Favorable nor Unfavorable -0-Neither Favorable nor Unfavorable -0- Neither Favorable nor Unfavorable -0- Neither Favorable nor Unfavorable Depreciation 7,000 7,000 Total fixed 35,700 35,700 Total costs $232,000 $227,680 $4,320 Favorable The monthly budget amounts in the report were based on an expected production of 65,000 units per month or 780,000 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 63,000 units were produced