Budget Performance Report Warwick Bottle Company (WBC) 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 $1.56 Direct materials 4.88 Factory overhead 0.32 Total $6.76 At the beginning of March, WBC management planned to produce 540,000 bottles. The actual number of bottles produced for March was 580,000 bottles. The actual costs for March of the current year were as follows: Cost Category Actual Cost for the Month Ended March 31, 2014 Direct labor $8,870 Direct materials 27,620 Factory overhead 1,870 Total $38,360 Enter all amounts as positive numbers. a. Prepare the March manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for WBC, 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 March. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Budget Performance Report
Warwick Bottle Company (WBC) 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 | $1.56 | |||||
| Direct materials | 4.88 | |||||
| Factory overhead | 0.32 | |||||
| Total | $6.76 | |||||
At the beginning of March, WBC management planned to produce 540,000 bottles. The actual number of bottles produced for March was 580,000 bottles. The actual costs for March of the current year were as follows:
| Cost Category | Actual Cost for
the Month Ended March 31, 2014 |
|||||||||
| Direct labor | $8,870 | |||||||||
| Direct materials | 27,620 | |||||||||
| Factory overhead | 1,870 | |||||||||
| Total | $38,360 | |||||||||
Enter all amounts as positive numbers.
a. Prepare the March manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for WBC, 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 March. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
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