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)


 
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