Salisbury Bottle Company manuf
Salisbury Bottle Company manufactures plastic two-liter bottlesfor the beverage industry. The cost standards per 100 two-literbottles are as follows:
Cost Category | Standard Costper 100 Two-LiterBottles | |||||
Direct labor | $1.20 | |||||
Direct materials | 6.50 | |||||
Factory overhead | 1.80 | |||||
Total | $9.50 |
At the beginning of March, Salisbury’s management planned toproduce 500,000 bottles. The actual number of bottles produced forMarch was 525,000 bottles. The actual costs for March of thecurrent year were as follows:
Cost Category | Actual Cost for theMonth Ended March 31 | |||||||||
Direct labor | $6,550 | |||||||||
Direct materials | 33,800 | |||||||||
Factory overhead | 9,100 | |||||||||
Total | $49,450 |
a. Prepare the March manufacturing standardcost 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 PlannedVolume (500,000 Bottles) | |
Manufacturing costs: | |
Direct labor | $ |
Direct materials | |
Factory overhead | |
Total | $ |
b. Prepare a budget performance report formanufacturing costs, showing the total cost variances for directmaterials, direct labor, and factory overhead for March. Enter afavorable variance as a negative number using a minus sign and anunfavorable variance as a positive number.
Salisbury Bottle Company | |||
Manufacturing Costs-Budget Performance Report | |||
For the Month Ended March 31 | |||
ActualCosts | Standard Costat Actual Volume(525,000 Bottles) | Cost Variance-(Favorable)Unfavorable | |
Manufacturing costs: | |||
Direct labor | $ | $ | $ |
Direct materials | |||
Factory overhead | |||
Total manufacturing cost | $ | $ | $ |
Answer:
Solutions
a. Statementof March manufacturingstandard cost budget (direct labor, direct materials, and factoryoverhead) for Salisbury, assuming planned production.
Salisbury Bottle Company |
|
Manufacturing Cost Budget |
|
For the Month Ended March 31 |
|
Standard Cost at PlannedVolume (500,000 Bottles) |
|
Manufacturing costs: |
|
Direct labor |
$6,000 |
Direct materials |
32,500 |
Factory overhead |
9,000 |
Total |
$47,500 |
(b) Statement of budget performancereport for manufacturing costs, showing the total cost variancesfor direct materials, direct labor, and factory overhead forMarch.
Salisbury Bottle Company |
|||
Manufacturing Costs-Budget Performance Report |
|||
For the Month Ended March 31 |
|||
ActualCosts |
Standard Costat Actual Volume(525,000 Bottles) |
Cost Variance-(Favorable)Unfavorable |
|
Manufacturing costs: |
|||
Direct labor |
$6,550 |
$6,300 |
$250 |
Direct materials |
33,800 |
34,125 |
(325) |
Factory overhead |
9,100 |
9,450 |
(350) |
Total manufacturing cost |
$49,450 |
$49,875 |
$(425) |