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                                       9.10 Factory overhead                                     0.55 Total                                                       $11.65 At the beginning of July, GBC management planned to produce 400,000 bottles. The actual number of bottles produced for July was 406,000 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                                                  $7,540 Direct materials                                            35,750 Factory overhead                                          2,680 Total                                                            $45,970 Enter all amounts as positive numbers. 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. The Company's actual costs were ? than budgeted. direct labor and direct material cost variances more than offset a small ?  factory overhead cost variance.

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

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                                       9.10

Factory overhead                                     0.55

Total                                                       $11.65

At the beginning of July, GBC management planned to produce 400,000 bottles. The actual number of bottles produced for July was 406,000 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                                                  $7,540

Direct materials                                            35,750

Factory overhead                                          2,680

Total                                                            $45,970

Enter all amounts as positive numbers.

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. The Company's actual costs were ? than budgeted.

direct labor and direct material cost variances more than offset a small ? 

factory overhead cost variance.



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