Salisbury 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 $1.20 Direct materials 6.50 Factory overhead 1.80 Total $9.50 At the beginning of March, Salisbury’s management planned to produce 500,000 bottles. The actual number of bottles produced for March was 525,000 bottles. The actual costs for March of the current year were as follows: Cost Category Actual Cost for the Month Ended March 31 Direct labor $6,550 Direct materials 33,800 Factory overhead 9,100 Total $49,450 a. Prepare the March manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for Salisbury, assuming planned production. Salisbury Bottle Company Manufacturing Cost Budget For the Month Ended March 31 Standard Cost at Planned Volume (500,000 Bottles) Manufacturing costs: Direct labor $fill in the blank 2a3ec1035004057_1 Direct materials fill in the blank 2a3ec1035004057_2 Factory overhead fill in the blank 2a3ec1035004057_3 Total $fill in the blank 2a3ec1035004057_4 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. Salisbury Bottle Company Manufacturing Costs-Budget Performance Report For the Month Ended March 31 Actual Costs Standard Cost at Actual Volume (525,000 Bottles) Cost Variance- (Favorable) Unfavorable Manufacturing costs: Direct labor $fill in the blank b113c3fb9065060_1 $fill in the blank b113c3fb9065060_2 $fill in the blank b113c3fb9065060_3 Direct materials fill in the blank b113c3fb9065060_4 fill in the blank b113c3fb9065060_5 fill in the blank b113c3fb9065060_6 Factory overhead fill in the blank b113c3fb9065060_7 fill in the blank b113c3fb9065060_8 fill in the blank b113c3fb9065060_9 Total manufacturing cost $fill in the blank b113c3fb9065060_10 $fill in the blank b113c3fb9065060_11 $fill in the blank b113c3fb9065060_12 c. The Company's actual costs were $425 than budgeted. direct materials and factory overhead cost variances more than offset a small direct labor cost variance.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Budget Performance Report
Salisbury Bottle Company manufactures plastic two-liter bottles for the beverage industry. The cost standards per 100 two-liter bottles are as follows:
| Cost Category | per 100 Two-Liter Bottles |
|||||
| Direct labor | $1.20 | |||||
| Direct materials | 6.50 | |||||
| Factory |
1.80 | |||||
| Total | $9.50 |
At the beginning of March, Salisbury’s management planned to produce 500,000 bottles. The actual number of bottles produced for March was 525,000 bottles. The actual costs for March of the current year were as follows:
| Cost Category | Actual Cost for the Month Ended March 31 |
|||||||||
| Direct labor | $6,550 | |||||||||
| Direct materials | 33,800 | |||||||||
| Factory overhead | 9,100 | |||||||||
| Total | $49,450 |
a. Prepare the March manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for Salisbury, assuming planned production.
| Salisbury Bottle Company | |
| Manufacturing Cost Budget | |
| For the Month Ended March 31 | |
| Standard Cost at Planned Volume (500,000 Bottles) |
|
| Manufacturing costs: | |
| Direct labor | $fill in the blank 2a3ec1035004057_1 |
| Direct materials | fill in the blank 2a3ec1035004057_2 |
| Factory overhead | fill in the blank 2a3ec1035004057_3 |
| Total | $fill in the blank 2a3ec1035004057_4 |
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.
| Salisbury Bottle Company | |||
| Manufacturing Costs-Budget Performance Report | |||
| For the Month Ended March 31 | |||
| Actual Costs |
Standard Cost at Actual Volume (525,000 Bottles) |
Cost Variance- (Favorable) Unfavorable |
|
| Manufacturing costs: | |||
| Direct labor | $fill in the blank b113c3fb9065060_1 | $fill in the blank b113c3fb9065060_2 | $fill in the blank b113c3fb9065060_3 |
| Direct materials | fill in the blank b113c3fb9065060_4 | fill in the blank b113c3fb9065060_5 | fill in the blank b113c3fb9065060_6 |
| Factory overhead | fill in the blank b113c3fb9065060_7 | fill in the blank b113c3fb9065060_8 | fill in the blank b113c3fb9065060_9 |
| Total manufacturing cost | $fill in the blank b113c3fb9065060_10 | $fill in the blank b113c3fb9065060_11 | $fill in the blank b113c3fb9065060_12 |
c. The Company's actual costs were $425 than budgeted. direct materials and
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