The principal product of Waterworks, Inc., is a metal water

The principal product of Waterworks, Inc., is a metal water bottle that carries a lifetime guarantee. Listed here are cost and production data for the water bottle.

Direct materials

Stainless steel: 0.25 kilogram per bottle at $8.00 per kilogram Clip for the handle: 1 per bottle at $0.10 each

Direct labor

Stamping operation: $30 per labor hour; 2 minutes per bottle


Stamping operation: rate equals 70 percent of department’s direct labor dollars

In January, February, and March, Waterworks expects to produce 200,000, 225,000, and 150,000 bottles, respectively. The company has no beginning or ending balances of direct materials inventory or work in process inventory for the year.


1. For the three-month period ending March 31, prepare monthly production cost information for the metal water bottle. Classify the costs as direct materials, direct labor, or overhead, and show your computations.

2. Prepare a cost of goods manufactured budget for the water bottle. Show monthly cost data and combined totals for the quarter for each cost category.


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