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: Standard Cost Cost Category per 100 Two-Liter Bottles Direct labor $1.46 Direct materials 5.82 Factory overhead 0.28 Total $7.56 At the beginning of July, GBC management planned to produce 600,000 bottles. The actual number of bottles produced for July was 648,000 bottles. The actual costs for July of the current year were as follows: Actual Cost for the Cost Category Month Ended July 31 Direct labor $9,272 Direct materials 36,808 Factory overhead 1,833 Total $47,913 Enter all amounts as positive numbers.

Answer 1

Solution a. Genie in a Bottle Company Manufacturing Cost Budget for the Month ended July 31 Cost Category Direct Labour Direct Materials Factory Overhead Satandard Cost Cost of 6,00,000 per 100 two-litre Bottles ( A / 100 bottles (A) x 600,000) $ 1.46 $ 8,760.00 5.82 $ 34,920.00 0.28 $ 1,680.00 Total 7.56 $ 45,360.00 Solution b. Genie in a Bottle Company Manufacturing Costs Budget Performance Report for the Month ended July 31 Standard Cost at Actual Vol Cost-Variance (648,000 bottles) Favourable/ (A/100 *648000) Unfavourable Satandard Cost per 100 two-litre Particulars bottles (A) Actual Costs Manufacturing Costs: Direct Labour $ 1.46 $ 9,272.00 Direct Materials 5.82 $ 36,808.00 Factory Overhead $ 0.28 $ 1,833.00 $ $ $ $ 9,460.80 $ 37,713.60 $ 1,814.40 $ 188.80 905.60 -18.60 $ 48,988.80 $ 1,075.80 $ 7.56 $ 47,913.00 Note: Negative value represents Unfavourable Variance Solution c The Company's Actual costs were $1075.8 Lower than budgeted. Favourable direct labour and direct material cost variances more than offset a small Unfavorable factory overhead cost variance

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