Budget Performance Report

Lanier Bottle Company 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\mathrm{.}25$

Direct materials $4\mathrm{.}80$

Factory overhead $1\mathrm{.}50$

Total $$7\mathrm{.}55$

At the beginning of January, Lanier Bottle$$s management planned to produce $3,500,000$ bottles. The actual number of bottles produced for January was $3,600,000$ bottles. The actual costs for January of the current year were as follows:

Cost Category Actual Cost for the Month

Ended January $31$

Direct labor $$46,750$

Direct materials $175,000$

Factory overhead $52,900$

Total $$274,650$

Question Content Area

a$.$ Prepare the January manufacturing standard cost budget $($direct labor, direct materials, and factory overhead$)$ for Lanier Bottle, assuming planned production.

Lanier Bottle Company

Manufacturing Cost Budget

For the Month Ended January $31$

Line Item Description Standard Cost

at Planned

Volume

$(3,500,000$

Bottles$)$

Manufacturing costs:

Direct labor $Direct labor

Direct materials Direct materials

Factory overhead Factory overhead

Total $Total

Question Content Area

b$.$ Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for January. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Lanier Bottle Company

Manufacturing Costs$-$Budget Performance Report

For the Month Ended January $31$

Line Item Description

Actual

Costs Standard Cost

at Actual

Volume

$(3,600,000$

Bottles$)$

Cost

Variance$-$

$($Favorable$)$

Unfavorable

Manufacturing costs:

Direct labor $Direct labor

$Direct labor

$Direct labor

Direct materials Direct materials

Direct materials

Direct materials

Factory overhead Factory overhead

Factory overhead

Factory overhead

Total manufacturing cost $Total manufacturing cost

$Total manufacturing cost

$Total manufacturing cost

Question Content Area

c$.$ Lanier Bottle Company's actual costs were $$2,850$ fill in the blank $1$ of $3$

than budgeted. The fill in the blank $2$ of $3$

direct labor and direct materials cost variances more than offset the fill in the blank $3$ of $3$

factory overhead cost variance.