Question

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			$1.32
Direct materials			6.26
Factory overhead			0.32
	Total		$7.9

At the beginning of July, GBC management planned to produce 430,000 bottles. The actual number of bottles produced for July was 464,400 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						$6,007
Direct materials						28,374
Factory overhead						1,501
	Total					$35,882

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(430,000 Bottles)
Manufacturing costs:
Direct labor	$
Direct materials
Factory overhead
Total	$

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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(464,400 Bottles)	Cost Variance- (Favorable) Unfavorable
Manufacturing costs:
Direct labor	$	$	$
Direct materials
Factory overhead
Total manufacturing cost	$	$	$

c. The Company's actual costs were $805.6 less than budgeted. Favorable direct labor and direct material cost variances more than offset a small unfavorable factory overhead cost variance.

Answer 1

a
Genie in a Bottle Company
Manufacturing Cost Budget
For the Month Ended July 31
	Standard Cost at Planned Volume(430,000 Bottles)
Manufacturing costs:
Direct labor	5676	=1.32*430000/100
Direct materials	26918	=6.26*430000/100
Factory overhead	1376	=0.32*430000/100
Total	33970
b
Genie in a Bottle Company
Manufacturing Costs-Budget Performance Report
For the Month Ended July 31
	Actual	Standard Cost at Actual Volume(464,400 Bottles)	Cost Variance-
	Costs		(Favorable)
			Unfavorable
Manufacturing costs:
Direct labor	6007	6130.08	-123.08	Favorable
Direct materials	28374	29071.44	-697.44	Favorable
Factory overhead	1501	1486.08	14.92	Unfavorable
Total manufacturing cost	35882	36687.6	-805.6	Favorable
c
The Company's actual costs were $805.6 less than budgeted. Favorable direct labor and direct material cost variances more than offset a small unfavorable factory overhead cost variance.
Standard cost working:
Direct labor	=1.32*464400/100 = $6130.08
Direct materials	=6.26*464400/100 = $29071.44
Factory overhead	=0.32*464400/100 = $1486.08