Ratchet company uses budgets in controlling costs. the august 2020 budget report for the company’s assembling department is as follows. ratchet company budget report assembling department for the month ended august 31, 2020 difference manufacturing costs budget actual favorable unfavorable neither favorable nor unfavorable variable costs direct materials $48,000 $47,000 $1,000 favorable direct labor 54,000 51,200 2,800 favorable indirect materials 24,000 24,200 200 unfavorable indirect labor 18,000 17,500 500 favorable utilities 15,000 14,900 100 favorable maintenance 12,000 12,400 400 unfavorable total variable 171,000 167,200 3,800 favorable fixed costs rent 12,000 12,000 –0– neither favorable nor unfavorable supervision 17,000 17,000 –0– neither favorable nor unfavorable depreciation 6,000 6,000 –0– neither favorable nor unfavorable total fixed 35,000 35,000 –0– neither favorable nor unfavorable total costs $206,000 $202,200 $3,800 favorable the monthly budget amounts in the report were based on an expected production of 60,000 units per month or 720,000 units per year. the assembling department manager is with the report and expects a raise, or at least praise for a job well done. the company president, however, is unhappy with the results for august because only 58,000 units were produced. a. state the total monthly budgeted cost formula.
b. prepare a budget report for august using flexible budget data.