Question
Warwick Bottle Company ( WBC ) manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows: Cost
Warwick Bottle Company (WBC) 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 | $1.50 | |||||
Direct materials | 4.84 | |||||
Factory overhead | 0.44 | |||||
Total | $6.78 |
At the beginning of March, WBC management planned to produce 660,000 bottles. The actual number of bottles produced for March was 710,000 bottles. The actual costs for March of the current year were as follows:
Cost Category | Actual Cost for the Month Ended March 31, 2014 | |||||||||
Direct labor | $10,440 | |||||||||
Direct materials | 33,540 | |||||||||
Factory overhead | 3,160 | |||||||||
Total | $47,140 |
Enter all amounts as positive numbers.
a. Prepare the March manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for WBC, assuming planned production.
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b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for March. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
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c. The Company's actual costs were $998
than budgeted. direct labor and direct material cost variances more than offset a small factory overhead cost variance.
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