Question

Time in a Bottle Company (TBC) 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 ......... $ 1.80
Direct materials ......... 8.25
Factory overhead ....... 0.50
Total ............ $ 10.55
At the beginning of May, TBC management planned to produce 600,000 bottles. The actual number of bottles produced for May was 610,000 bottles. The actual costs for May of the current year were as follows:
Actual Cost for the
Cost Category Month Ended May 31, 2014
Direct labor ........... $ 9,890
Direct materials ......... 48,450
Factory overhead ....... 3,460
Total ............. $ 61,800
a. Prepare the May manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for TBC, 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 May.
c. Interpret the budget performance report.



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  • CreatedJune 27, 2014
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