Question

Budget Performance Report

Genie in a Bottle Company (GBC) manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows:

Cost Category		Standard Cost per 100 Two-Liter Bottles
Direct labor			$1.22
Direct materials			5.14
Factory overhead			0.28
	Total		$6.64

At the beginning of July, GBC management planned to produce 620,000 bottles. The actual number of bottles produced for July was 669,600 bottles. The actual costs for July of the current year were as follows:

Cost Category		Actual Cost for the Month Ended July 31
Direct labor						$8,006
Direct materials						33,591
Factory overhead						1,894
	Total					$43,491

Enter all amounts as positive numbers.

a. Prepare the July manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for WBC, assuming planned production.

Genie in a Bottle Company
Manufacturing Cost Budget
For the Month Ended July 31
	Standard Cost at Planned Volume(620,000 Bottles)
Manufacturing costs:
Direct labor	$
Direct materials
Factory overhead
Total	$

Feedback

Compare the actual costs with the standard cost at actual volume for direct labor, direct materials, and overhead. Identify the cost variance as favorable (actual less than standard) or unfavorable (actual greater than standard).

Review the concepts of favorable and unfavorable variances.

Learning Objective 2.

b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If required, round your answers to nearest cent.

Genie in a Bottle Company
Manufacturing Costs-Budget Performance Report
For the Month Ended July 31
	Actual Costs	Standard Cost at Actual Volume(669,600 Bottles)	Cost Variance- (Favorable) Unfavorable
Manufacturing costs:
Direct labor	$	$	$
Direct materials
Factory overhead
Total manufacturing cost	$	$	$

Answer 1

a.		Per 100 bottles	620000 bottles
	Manufacturing costs:
	Direct material	$                   1.22	$               7,564
	Direct labor	$                   5.14	$             31,868
	Factory overheads	$                   0.28	$               1,736
	Total	$                   6.64	$             41,168
b.			Actual Cost	Standard cost	Cost Variance
		per 100 bottles		669600 bottles
	Manufacturing costs:
	Direct material	$                   1.22	$               8,006	$         8,169.12	$          -163.12	F
	Direct labor	$                   5.14	$             33,591	$       34,417.44	$          -826.44	F
	Factory overheads	$                   0.28	$               1,894	$         1,874.88	$              19.12	U
	Total	$                   6.64	$             43,491	$       44,461.44	$          -970.44	F