McAlisters 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 $2.75 Direct materials 1.20 Factory overhead 0.35 Total $4.30 At the beginning of May, McAlisters Bottle's management planned to produce 800,000 bottles. The actual number of bottles produced for May was 750,000 bottles. The actual costs for May of the current year were as follows: Cost Category Actual Cost for the Month Ended May 31 Direct labor $21,100 Direct materials 9,200 Factory overhead 2,700 Total $33,000 a. Prepare the May manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for McAlisters Bottle Company, assuming planned production. Enter all amounts as positive numbers. McAlisters Bottle Company Manufacturing Cost Budget For the Month Ended May 31 Standard Cost at Planned Volume (800,000 Bottles) Manufacturing costs: Direct labor $fill in the blank 852e7907eff9ff8_1 Direct materials fill in the blank 852e7907eff9ff8_2 Factory overhead fill in the blank 852e7907eff9ff8_3 Total $fill in the blank 852e7907eff9ff8_4 b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for May. Enter favorable variances as negative numbers. Enter unfavorable variances and all other amounts as positive numbers. McAlisters Bottle Company Manufacturing Costs - Budget Performance Report For the Month Ended May 31 Actual costs Standard Cost at Actual Volume (750,000 bottles) Cost Variance Unfavorable (Favorable) Manufacturing costs: Direct labor $fill in the blank 1ed2d906cfff000_1 $fill in the blank 1ed2d906cfff000_2 $fill in the blank 1ed2d906cfff000_3 Direct materials fill in the blank 1ed2d906cfff000_4 fill in the blank 1ed2d906cfff000_5 fill in the blank 1ed2d906cfff000_6 Factory overhead fill in the blank 1ed2d906cfff000_7 fill in the blank 1ed2d906cfff000_8 fill in the blank 1ed2d906cfff000_9 Total manufacturing cost $fill in the blank 1ed2d906cfff000_10 $fill in the blank 1ed2d906cfff000_11 $fill in the blank 1ed2d906cfff000_12

Cost Category

Standard Cost
per 100 Two-Liter
Bottles

Direct labor

Direct materials

Factory overhead

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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McAlisters Bottle Company manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows:

At the beginning of May, McAlisters Bottle's management planned to produce 800,000 bottles. The actual number of bottles produced for May was 750,000 bottles. The actual costs for May of the current year were as follows:

Cost Category	Actual Cost for the Month Ended May 31
Direct labor		$21,100
Direct materials		9,200
Factory overhead		2,700
	Total		$33,000

a. Prepare the May manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for McAlisters Bottle Company, assuming planned production. Enter all amounts as positive numbers.

McAlisters Bottle Company
Manufacturing Cost Budget
For the Month Ended May 31
	Standard Cost at Planned Volume (800,000 Bottles)
Manufacturing costs:
Direct labor	$fill in the blank 852e7907eff9ff8_1
Direct materials	fill in the blank 852e7907eff9ff8_2
Factory overhead	fill in the blank 852e7907eff9ff8_3
Total	$fill in the blank 852e7907eff9ff8_4

b. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for May. Enter favorable variances as negative numbers. Enter unfavorable variances and all other amounts as positive numbers.

McAlisters Bottle Company
Manufacturing Costs - Budget Performance Report
For the Month Ended May 31
	Actual costs	Standard Cost at Actual Volume (750,000 bottles)	Cost Variance Unfavorable (Favorable)
Manufacturing costs:
Direct labor	$fill in the blank 1ed2d906cfff000_1	$fill in the blank 1ed2d906cfff000_2	$fill in the blank 1ed2d906cfff000_3
Direct materials	fill in the blank 1ed2d906cfff000_4	fill in the blank 1ed2d906cfff000_5	fill in the blank 1ed2d906cfff000_6
Factory overhead	fill in the blank 1ed2d906cfff000_7	fill in the blank 1ed2d906cfff000_8	fill in the blank 1ed2d906cfff000_9
Total manufacturing cost	$fill in the blank 1ed2d906cfff000_10	$fill in the blank 1ed2d906cfff000_11	$fill in the blank 1ed2d906cfff000_12

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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