PLUS sae OURCES BACK Problem 24-3A (Part Level Submission) Ratchet Company uses
ID: 2586751 • Letter: P
Question
PLUS sae OURCES BACK Problem 24-3A (Part Level Submission) Ratchet Company uses budgets in controlling costs. The August 2017 budget report for the Part n) Part e) company's Assernbing Department is as foilows Budget Report the Month Ended August 31, 2017 yStudy Direct materials $49,600 $48,500 $1,100 Favorable 57,040 54,040 3,000 Favorable Direct labor Indirect materials 27,280 27,580 300 Unavorable 22,320 21,910 410 Favorable 15,500 15,390110 Favorable Ubiities Total vanable Jaano 15e2-4120 Favorable Rent Supervision Depreciation 100 7,100 Neither Favorable nor Unfavorable 11,500 11,500 0- Neither Favorable nor Unavorable Neither Favorable nor u Total fixed 35,700 35,700Neither Favorable nor Unfavorable Total costs 214,880 9210.750 54.130 Favorable The monthly budget amounts in the report were besed on an expected production of 62,000 units per month or 744,000 uns per year. The Assembing Department manager is pleased with the report and expects a raise, or at least praise for a job well done. The however, is unhappy with the resuits for August because only 60,000 units were preduced company president, (a) & (b)Explanation / Answer
Answer:
(a)
Total Monthly cost formulla is
Budgeted cost formula
= Fixed cost + variable cost per unit
=35,700 +(179180/62000)
=3580 + variable cost 2.89 Per unit
______________________________________
(2)
Ratchet Company
Assembling department
Flexible Budget Report
for the Month ended Jun 30. 2017.
Details
Budget
Actual
Difference
Favorable/ Unfavorable
60,000 units
60,000 units
Variable cost
-
Direct materials (0.80*60,000)
48000
48500
500
Unfavorable
Direct Labor (0.92*60,000)
55200
54040
1160
favorable
Indirect materials (0.44*60,000)
26400
27580
1180
Unfavorable
Indirect Labor (0.36*60,000)
21600
21910
310
Unfavorable
Utilities (0.25*60,000)
15000
15390
390
Unfavorable
Maintenance (0.12*60,000)
7200
7630
430
Unfavorable
Total variable
173400
175050
1650
Unfavorable
Fixed costs
Rent
11500
11500
0
Supervision
17100
17100
0
Depreciation
7100
7100
0
Total Fixed costs
35700
35700
0
Total costs
209100
210750
1650
Unfavorable
Ratchet Company
Assembling department
Flexible Budget Report
for the Month ended Jun 30. 2017.
Details
Budget
Actual
Difference
Favorable/ Unfavorable
60,000 units
60,000 units
Variable cost
-
Direct materials (0.80*60,000)
48000
48500
500
Unfavorable
Direct Labor (0.92*60,000)
55200
54040
1160
favorable
Indirect materials (0.44*60,000)
26400
27580
1180
Unfavorable
Indirect Labor (0.36*60,000)
21600
21910
310
Unfavorable
Utilities (0.25*60,000)
15000
15390
390
Unfavorable
Maintenance (0.12*60,000)
7200
7630
430
Unfavorable
Total variable
173400
175050
1650
Unfavorable
Fixed costs
Rent
11500
11500
0
Supervision
17100
17100
0
Depreciation
7100
7100
0
Total Fixed costs
35700
35700
0
Total costs
209100
210750
1650
Unfavorable
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