Question4 Ratchet Coampany uss budgets in conroling coats. The August 2017 budge

Question

Question4 Ratchet Coampany uss budgets in conroling coats. The August 2017 budget report for the companys Accembling Department is as folowa RATCHET COMPANY Dudget Report For the Month Ended August 31, 2017 Budget Actusl Direct m53,750 $52,750 1,000 Favorabk 61,440 5B,240 3,200 Favorabl Indirect materials 29.440 29,640 200 Unfevorable ndirect bbor 21,760 21,310 450 Favorsble 22,400 22,200 200 Favorable Maintanance1 52D 1L780 260 nfavorabie Fixed cost 10,800 10,800 -Naither Faworable nor Unfavorable 18,600 18,6000-Neither Favorable ner Unfavorable 5.500 5.500Neither Totel fixed 34.900 34.900 - Neither Fevorable nor Unfavorable 5235,220 1230,830 The month y budget an o ts 'n the repor ere based on an expec ed production o G4 000 units per month o 76 with the results for August becouse only 62,000 units were produced. 000 units per year. The Assem ing epartment manager i5 pleased with the eport and expects ise, or at ese pr se or ? job we done. The co president however, .5 unhappy

Explanation / Answer

Workings:

RATCHET COMPANY Assembling Department Flexible Budget Report For the moth ended September 30, 2017 Budget Actual Variance Units 68000 68000 Variable Costs: Direct material 57120 58036 916 Unfavurable Direct labor 65280 64064 1216 Favourable Indrect material 31280 32604 1324 Unfavurable Indirect labor 23120 23441 321 Unfavurable Utilities 23800 24420 620 Unfavurable Maintanance 12240 12958 718 Unfavurable Total variable costs 212840 215523 2683 Unfavurable Fixed Costs: Rent 10800 10800 Neither favourable nor unfavourable Supervision 18600 18600 Neither favourable nor unfavourable Depreciation 5500 5500 Neither favourable nor unfavourable Total Fixed costs 34900 34900 Neither favourable nor unfavourable Total Costs 247740 250423 2683 Unfavourable Actual variable costs are 10% higher than the actual costs in August. Actual fixed costs for September are the same as in August.

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