Budget Performance Report Genie in a Bottle Company (GBC) manufactures plastic t

Question

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:

At the beginning of July, GBC management planned to produce 430,000 bottles. The actual number of bottles produced for July was 464,400 bottles. The actual costs for July of the current year were as follows:

Enter all amounts as positive numbers.

a. Prepare the July 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 July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If required, round your answers to nearest cent.

c. The Company's actual costs were $746.96 than budgeted. direct labor and direct material cost variances more than offset a small factory overhead cost variance.

Cost Category Standard Cost
per 100 Two-Liter
Bottles Direct labor $1.12 Direct materials 5.9 Factory overhead 0.32 Total $7.34

Explanation / Answer

Answer a. Genie in a Bottle Company Manufacturing Cost Budget For the Month Ended July 31 Manufacturing Costs Standard Cost at Planned Volume (430,000 Bottles) Direct Labor - $1.12 X 430,000/100                          4,816.00 Direct Materials - $5.90 X 430,000/100                        25,370.00 Factory Overhead - $0.32 X 430,000/100                          1,376.00 Total                        31,562.00 Answer b. Genie in a Bottle Company Budget Performance Report For the Month Ended July 31 Manufacturing Costs Actual Costs Standard Cost at Planned Volume (464,400 Bottles) Cost Variance Direct Labor                          5,097.00                           5,201.28              104.28 (F) $1.12 X 464,400/100 Direct Materials                        26,742.00                         27,399.60              657.60 (F) $5.90 X 464,400/100 Factory Overhead                          1,501.00                           1,486.08                14.92 (U) $0.32 X 464,400/100 Total                        33,340.00                         34,086.96              746.96 (F) Answer c. TRUE The company is having favourable variance in Direct Labor and Direct Materials Costs which offsets the unfavorable variance of Factory Overhead.

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