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	$1.25
Direct materials	4.80
Factory overhead	1.50
Total	$7.55

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.

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.

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

moreless

than budgeted. The fill in the blank 2 of 3

favorableunfavorable

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

favorableunfavorable

factory overhead cost variance.