McAlisters 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 5.52 Factory overhead 0.26 Total $6.98 At the beginning of May, McAlisters Bottle’s management planned to produce 530,000 bottles. The actual number of bottles produced for May was 570,000 bottles. The actual costs for May of the current year were as follows: Cost Category Actual Cost for the Month Ended May 31 Direct labor $6,980 Direct materials 30,710 Factory overhead 1,500 Total $39,190 a. Prepare the May manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for McAlisters Bottle Company, assuming planned production. Enter all amounts as positive numbers. McAlisters Bottle Company Manufacturing Cost Budget For the Month Ended May 31 Standard Cost at Planned Volume (530,000 Bottles) Manufacturing costs: Direct labor $fill in the blank fe0619febf8afda_1 Direct materials fill in the blank fe0619febf8afda_2 Factory overhead fill in the blank fe0619febf8afda_3 Total $fill in the blank fe0619febf8afda_4 b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for May. Enter favorable variances as negative numbers. Enter unfavorable variances and all other amounts as positive numbers. McAlisters Bottle Company Manufacturing Costs - Budget Performance Report For the Month Ended May 31 Actual Costs Standard Cost at Actual Volume (570,000 bottles) Cost Variance (Favorable) Unfavorable Manufacturing costs: Direct labor $fill in the blank d169b203102efe5_1 $fill in the blank d169b203102efe5_2 $fill in the blank d169b203102efe5_3 Direct materials fill in the blank d169b203102efe5_4 fill in the blank d169b203102efe5_5 fill in the blank d169b203102efe5_6 Factory overhead fill in the blank d169b203102efe5_7 fill in the blank d169b203102efe5_8 fill in the blank d169b203102efe5_9 Total manufacturing cost $fill in the blank d169b203102efe5_10 $fill in the blank d169b203102efe5_11 $fill in the blank d169b203102efe5_12 c. Which of the following statements is true regarding McAlisters's budget performance report?

Cost Category

Standard Cost
per 100 Two-Liter
Bottles

Direct labor

Direct materials

Factory overhead

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter9: Evaluating Variances From Standard Costs

Section: Chapter Questions

Problem 3E: Salisbury Bottle Company manufactures plastic two-liter bottles for the beverage industry. The cost...

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Question

McAlisters Bottle Company manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows:

At the beginning of May, McAlisters Bottle’s management planned to produce 530,000 bottles. The actual number of bottles produced for May was 570,000 bottles. The actual costs for May of the current year were as follows:

Cost Category	Actual Cost for the Month Ended May 31
Direct labor		$6,980
Direct materials		30,710
Factory overhead		1,500
	Total		$39,190

a. Prepare the May manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for McAlisters Bottle Company, assuming planned production. Enter all amounts as positive numbers.

McAlisters Bottle Company
Manufacturing Cost Budget
For the Month Ended May 31
	Standard Cost at Planned Volume (530,000 Bottles)
Manufacturing costs:
Direct labor	$fill in the blank fe0619febf8afda_1
Direct materials	fill in the blank fe0619febf8afda_2
Factory overhead	fill in the blank fe0619febf8afda_3
Total	$fill in the blank fe0619febf8afda_4

b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for May. Enter favorable variances as negative numbers. Enter unfavorable variances and all other amounts as positive numbers.

McAlisters Bottle Company
Manufacturing Costs - Budget Performance Report
For the Month Ended May 31
	Actual Costs	Standard Cost at Actual Volume (570,000 bottles)	Cost Variance (Favorable) Unfavorable
Manufacturing costs:
Direct labor	$fill in the blank d169b203102efe5_1	$fill in the blank d169b203102efe5_2	$fill in the blank d169b203102efe5_3
Direct materials	fill in the blank d169b203102efe5_4	fill in the blank d169b203102efe5_5	fill in the blank d169b203102efe5_6
Factory overhead	fill in the blank d169b203102efe5_7	fill in the blank d169b203102efe5_8	fill in the blank d169b203102efe5_9
Total manufacturing cost	$fill in the blank d169b203102efe5_10	$fill in the blank d169b203102efe5_11	$fill in the blank d169b203102efe5_12

c. Which of the following statements is true regarding McAlisters's budget performance report?

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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