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			$1.12
Direct materials			5.26
Factory overhead			0.24
	Total		$6.62

At the beginning of July, GBC management planned to produce 440,000 bottles. The actual number of bottles produced for July was 475,200 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						$5,216
Direct materials						24,396
Factory overhead						1,152
	Total					$30,764

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(440,000 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(475,200 Bottles)	Cost Variance- (Favorable) Unfavorable
Manufacturing costs:
Direct labor	$	$	$
Direct materials
Factory overhead
Total manufacturing cost	$	$	$

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.

c. The Company's actual costs were $694.24 than budgeted. direct labor and direct material cost variances more than offset a small factory overhead cost variance.

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.

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Incorrect

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Answer 1

Answer for a)

Genie in a bottle company manufacturing cost budget for the month ended July 31:

	standards costs at planned volume(440000 bottles)
Manufacturing costs:	$
Direct labour	4928 [$1.12×440000 bottles/100 bottles]
Direct materials	23144 [$5.26×440000 bottles/100 bottles]
Factory overheads	1056 [0.24$×440000 bottles/100bottles]
Total	29128

Answer for b)

Genie in a bottle company manufacturing cost budget comparison for month ended July 31

	Actual costs	standard costs at actual volume	variance
Manufacturing costs	$	$
Direct labour	5216	5322.24 [$1.12×475200bottles/100bottles]	(106.24)
Direct material	24396	24995.52 [$5.26×475200bottles/100bottles]	(599.52)
Factory overhead	1152	1140.48 [$0.24×475200bottles/100bottles]	11.52
Total	30764	31458.24	(694.24)

Answer for c)

The company actual costs were $694.24 Less than budgeted.