For the Month Ended August 31, 2022 The monthly budget amounts in the report were based...

 

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For the Month Ended August 31, 2022 The monthly budget amounts in the report were based on an expected production of 60,000 units per expects a raise, or at least praise for a job well done. The company president, however, is unhappy with Eport for the company's Assembling Department is as follows. Ratchet Company Budget Report Assembling Department Difference Favorable F Manufacturing Costs Budget Unfavorable U Actual Variable costs Direct materials $1,000 F 2,800 F 200 U $ 48,000 $ 47,000 51,200 Direct labor Indirect materials Indirect labor Utilities Maintenance 54,000 24,000 24,200 17,500 500 F 18,000 15,000 12,000 100 F 14,900 400 U 12,400 Total variable 171,000 3,800 F 167,200 Fixed costs Rent -0- -0- 12,000 12,000 Supervision Depreciation 17,000 17,000 6,000 6,000 -0- Total fixed 35,000 35,000 -0- Total costs $206,000 $3,800 F $202,200 month or 720,000 units per year. The Assembling Department manager is pleased with the repont ith the results for August because only 58,000 units were produced. Instructions a. State the total monthly budgeted cost formula. b. Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data? c. 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. For the Month Ended August 31, 2022 The monthly budget amounts in the report were based on an expected production of 60,000 units per expects a raise, or at least praise for a job well done. The company president, however, is unhappy with Eport for the company's Assembling Department is as follows. Ratchet Company Budget Report Assembling Department Difference Favorable F Manufacturing Costs Budget Unfavorable U Actual Variable costs Direct materials $1,000 F 2,800 F 200 U $ 48,000 $ 47,000 51,200 Direct labor Indirect materials Indirect labor Utilities Maintenance 54,000 24,000 24,200 17,500 500 F 18,000 15,000 12,000 100 F 14,900 400 U 12,400 Total variable 171,000 3,800 F 167,200 Fixed costs Rent -0- -0- 12,000 12,000 Supervision Depreciation 17,000 17,000 6,000 6,000 -0- Total fixed 35,000 35,000 -0- Total costs $206,000 $3,800 F $202,200 month or 720,000 units per year. The Assembling Department manager is pleased with the repont ith the results for August because only 58,000 units were produced. Instructions a. State the total monthly budgeted cost formula. b. Prepare a budget report for August using flexible budget data. Why does this report provide a better basis for evaluating performance than the report based on static budget data? c. 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.

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