Question

Mackinaw Inc. processes a base chemical into plastic. Standard costs and actual costs for direct materials, direct labor, and factory overhead incurred for the manufacture of 74,000 units of product were as follows:

	Standard Costs		Actual Costs
Direct materials	244,200 lbs. at $5.90		241,800 lbs. at $5.80
Direct labor	18,500 hrs. at $16.70		18,930 hrs. at $16.90
Factory overhead	Rates per direct labor hr.,
	based on 100% of normal
	capacity of 19,310 direct
	labor hrs.:
		Variable cost, $4.80	$87,910 variable cost
		Fixed cost, $7.60	$146,756 fixed cost

Each unit requires 0.25 hour of direct labor.

Required:

a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct Materials Price Variance	$fill in the blank 1	Favorable
Direct Materials Quantity Variance	$fill in the blank 3	Favorable
Total Direct Materials Cost Variance	$fill in the blank 5	Favorable

b. Determine the direct labor rate variance, direct labor time variance, and total direct labor cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Direct Labor Rate Variance	$fill in the blank 7	Unfavorable
Direct Labor Time Variance	$fill in the blank 9	Unfavorable
Total Direct Labor Cost Variance	$fill in the blank 11	Unfavorable

c. Determine the variable factory overhead controllable variance, fixed factory overhead volume variance, and total factory overhead cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Variable factory overhead controllable variance	$fill in the blank 13	Favorable
Fixed factory overhead volume variance	$fill in the blank 15	Unfavorable
Total factory overhead cost variance	$fill in the blank 17	Unfavorable

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Salisbury Bottle Company 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			$1.20
Direct materials			6.50
Factory overhead			1.80
	Total		$9.50

At the beginning of March, Salisbury’s management planned to produce 500,000 bottles. The actual number of bottles produced for March was 525,000 bottles. The actual costs for March of the current year were as follows:

Cost Category		Actual Cost for the Month Ended March 31
Direct labor						$6,550
Direct materials						33,800
Factory overhead						9,100
	Total					$49,450

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

Salisbury Bottle Company
Manufacturing Cost Budget
For the Month Ended March 31
	Standard Cost at Planned Volume (500,000 Bottles)
Manufacturing costs:
Direct labor	$fill in the blank 2a7622f89feafff_1
Direct materials	fill in the blank 2a7622f89feafff_2
Factory overhead	fill in the blank 2a7622f89feafff_3
Total	$

b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for March. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Salisbury Bottle Company
Manufacturing Costs-Budget Performance Report
For the Month Ended March 31
	Actual Costs	Standard Cost at Actual Volume (525,000 Bottles)	Cost Variance- (Favorable) Unfavorable
Manufacturing costs:
Direct labor	$fill in the blank 019f30fe904d003_1	$fill in the blank 019f30fe904d003_2	$fill in the blank 019f30fe904d003_3
Direct materials	fill in the blank 019f30fe904d003_4	fill in the blank 019f30fe904d003_5	fill in the blank 019f30fe904d003_6
Factory overhead	fill in the blank 019f30fe904d003_7	fill in the blank 019f30fe904d003_8	fill in the blank 019f30fe904d003_9
Total manufacturing cost	$fill in the blank 019f30fe904d003_10	$fill in the blank 019f30fe904d003_11	$fill in the blank 019f30fe904d003_12

Answer 1