COSt P10-3A Ratchet Company flexible report for the company\'s Assembling Depart
ID: 2404649 • Letter: C
Question
COSt P10-3A Ratchet Company flexible report for the company's Assembling Departmentosts. The A uses budgets company's Assembling Department is as follows. RATCHET COMPANY Budget Report Assembling Department For the Month Ended August 31, 2017 Difference Favorable Unfavorable U Manufacturing Costs Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance 1,000 F 2,800 F 200 U 500 F 100 F 400 U 48,000 $47,000 51,200 54,00024,200 24,000 18,000 15,000 12,000 17,500 14,900 12,400 167,200 171.000 167,.2003,800 F Total variable Fixed costs Rent Supervision Depreciation 12,000 17,000 6,000 35,000 12,000 17,000 6,000 35,000 $206,000 $202,200 Total fixed Total costs $3,800 F The monthly budget amounts in the report were based on an expected productiond 60,000 units per month or 720,000 units per year. The Assembling Department managers pleased with the report and expects a raise, or at least praise for a job well done. The con pany president, however, is unhappy with the results for August because only 58,000 t5 were produced. Instructions (a) State the total monthly budgeted cost formula. August using flexible budget data. Why does this report for evaluating performance than the report based on static bou budget report for provide a bette get data? report using Blexible actual cost in (c) In September, 64,000 units were produced. Prepare the budget data, assuming (1) each variable cost was 10% higher than its August, and (2) fixed costs were the same in September as inExplanation / Answer
Answer:
Total budgeted fixed cost+(Budgeted variable cost/no.of budgeted units)
=$35000+$2.85 varible cost per unit
2. Flexible budget for August
Budgeted
actual
Difference
Favourable(F)/Un favourable(UF).
Units
58000
58000
Variable cost
D.Materials
46400
47000
-600
UF
D.Labour
52200
51200
1000
F
Indirect Material
23200
24200
-1000
UF
Indirect Labour
17400
17500
-100
UF
Utilities
14500
14900
-400
UF
Maitenance
11600
12400
-800
UF
Total Variable
165300
167200
-1900
UF
Fixed Cost
Rent
12000
12000
0
Supervision
17000
17000
0
Depreciation
6000
6000
0
Total Fixed Cost
35000
35000
0
Total Cost
200300
202200
-1900
UF
3.FLEXIBLE BUDGET IN SEPTEMBER MONTH IN CASE VARIABL COST INCREAE BY 10%
Budgeted
actual
Difference
Favourable(F)/Un favourable(UF).
Units
64000
64000
Variable cost
D.Materials
56320
57048
-728
UF
D.Labour
63360
62146
1214
F
Indirect Material
28160
29374
-1214
UF
Indirect Labour
21120
21241
-121
UF
Utilities
17600
18086
-486
UF
Maintenance
14080
15051
-971
UF
Total Variable
200640
202946
-2306
UF
Fixed Cost
Rent
12000
12000
0
Supervision
17000
17000
0
Depreciation
6000
6000
0
Total Fixed Cost
35000
35000
0
Total Cost
235640
237946
-2306
UF
Budgeted
actual
Difference
Favourable(F)/Un favourable(UF).
Units
58000
58000
Variable cost
D.Materials
46400
47000
-600
UF
D.Labour
52200
51200
1000
F
Indirect Material
23200
24200
-1000
UF
Indirect Labour
17400
17500
-100
UF
Utilities
14500
14900
-400
UF
Maitenance
11600
12400
-800
UF
Total Variable
165300
167200
-1900
UF
Fixed Cost
Rent
12000
12000
0
Supervision
17000
17000
0
Depreciation
6000
6000
0
Total Fixed Cost
35000
35000
0
Total Cost
200300
202200
-1900
UF