Problem 10-3A (Part Level Submission) Ratchet Company uses budgets in controllin

Question

Problem 10-3A (Part Level Submission) Ratchet Company uses budgets in controlling costs. The August 2017 budget report for the company's Assembling Department is as follows RATCHET COMPANY Budget Report Assembling Department For the Month Ended August 31, 2017 Difference Favorable Unfavorable Neither Favorable nor Unfavorable Manufacturing Costs Budget Actual Variable costs Direct materials Direct labor Indirect materials Indirect labor Utilities Maintenance $53,680 $52,680 $1,000 Favorable 54,900 52,100 2,800 Favorable 28,060 28,160 100 Unfavorable 19,520 19,060 460 Favorable 15,250 15,060 190 Favorable 12,200 12,300 100 Unfavorable Total variable 183,610 179,360 4,250 Favorable Fixed costs Rent Supervision Depreciation 12,600 12,6000- Neither Favorable nor Unfavorable 18,600 18,600 0 Neither Favorable nor Unfavorable -0- Neither Favorable nor Unfavorable 7,800 7,800

Explanation / Answer

Answer c. RATCHET COMPANY Assembling Department Flexible Budget Report Budget Actual Difference No. of Units Produced      65,000.00      65,000.00 Variable Costs Direct Materials      57,200.00      63,841.02        6,641.02 Unfavourable Direct Labor      58,500.00      63,138.14        4,638.14 Unfavourable Indirect Materials      29,900.00      34,126.10        4,226.10 Unfavourable Indirect Labor      20,800.00      23,098.14        2,298.14 Unfavourable Utilities      16,250.00      18,250.68        2,000.68 Unfavourable Maintenance      13,000.00      14,905.93        1,905.93 Unfavourable Total Variable Costs    195,650.00    217,360.00     21,710.00 Unfavourable Fixed Costs Rent      12,600.00      12,600.00                     -   Neither Favourable nor Unfavourable Supervision      18,600.00      18,600.00                     -   Neither Favourable nor Unfavourable Deptreciation        7,800.00        7,800.00                     -   Neither Favourable nor Unfavourable Total Fixed Costs      39,000.00      39,000.00                     -   Neither Favourable nor Unfavourable Total Costs    234,650.00    256,360.00 (21,710.00) Unfavourable

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