Salisbury 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 6.50 Factory overhead 1.80 Total $9.50 At the beginning of March, Salisbury’s management planned to produce 500,000 bottles. The actual number of bottles produced for March was 525,000 bottles. The actual costs for March of the current year were as follows: Cost Category Actual Cost for the Month Ended March 31 Direct labor $6,550 Direct materials 33,800 Factory overhead 9,100 Total $49,450 a. Prepare the March manufacturing standard cost 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 Planned Volume (500,000 Bottles) Manufacturing costs: Direct labor $fill in the blank 2a3ec1035004057_1 Direct materials fill in the blank 2a3ec1035004057_2 Factory overhead fill in the blank 2a3ec1035004057_3 Total $fill in the blank 2a3ec1035004057_4 b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for March. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Salisbury Bottle Company Manufacturing Costs-Budget Performance Report For the Month Ended March 31 Actual Costs Standard Cost at Actual Volume (525,000 Bottles) Cost Variance- (Favorable) Unfavorable Manufacturing costs: Direct labor $fill in the blank b113c3fb9065060_1 $fill in the blank b113c3fb9065060_2 $fill in the blank b113c3fb9065060_3 Direct materials fill in the blank b113c3fb9065060_4 fill in the blank b113c3fb9065060_5 fill in the blank b113c3fb9065060_6 Factory overhead fill in the blank b113c3fb9065060_7 fill in the blank b113c3fb9065060_8 fill in the blank b113c3fb9065060_9 Total manufacturing cost $fill in the blank b113c3fb9065060_10 $fill in the blank b113c3fb9065060_11 $fill in the blank b113c3fb9065060_12 c. The Company's actual costs were $425 than budgeted. direct materials and factory overhead cost variances more than offset a small direct labor cost variance.

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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Budget Performance Report

Salisbury 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 March, Salisbury’s management planned to produce 500,000 bottles. The actual number of bottles produced for March was 525,000 bottles. The actual costs for March of the current year were as follows:

Cost Category	Actual Cost for the Month Ended March 31
Direct labor		$6,550
Direct materials		33,800
Factory overhead		9,100
	Total		$49,450

a. Prepare the March manufacturing standard cost 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 Planned Volume (500,000 Bottles)
Manufacturing costs:
Direct labor	$fill in the blank 2a3ec1035004057_1
Direct materials	fill in the blank 2a3ec1035004057_2
Factory overhead	fill in the blank 2a3ec1035004057_3
Total	$fill in the blank 2a3ec1035004057_4

b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for March. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Salisbury Bottle Company
Manufacturing Costs-Budget Performance Report
For the Month Ended March 31
	Actual Costs	Standard Cost at Actual Volume (525,000 Bottles)	Cost Variance- (Favorable) Unfavorable
Manufacturing costs:
Direct labor	$fill in the blank b113c3fb9065060_1	$fill in the blank b113c3fb9065060_2	$fill in the blank b113c3fb9065060_3
Direct materials	fill in the blank b113c3fb9065060_4	fill in the blank b113c3fb9065060_5	fill in the blank b113c3fb9065060_6
Factory overhead	fill in the blank b113c3fb9065060_7	fill in the blank b113c3fb9065060_8	fill in the blank b113c3fb9065060_9
Total manufacturing cost	$fill in the blank b113c3fb9065060_10	$fill in the blank b113c3fb9065060_11	$fill in the blank b113c3fb9065060_12

c. The Company's actual costs were $425 than budgeted. direct materials and factory overhead cost variances more than offset a small direct labor cost variance.

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