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	$2.00
Direct materials	10.00
Factory overhead	0.70
Total	$12.70

At the beginning of July, GBC management planned to produce 395,000 bottles. The actual number of bottles produced for July was 399,000 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	$7,420
Direct materials	38,706
Factory overhead	3,258
Total	$49,384

	Required:
A.	Prepare the July manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for GBC, assuming planned production.
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.
C.	Interpret the budget performance report.

Answer 1

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