Concept explainers
(a)
Concept Introduction:
To Prepare:
The manufacturing standard cost budget forMay for McAlister's Bottle company.
Answer to Problem 13.19E
The standard cost budget for May manufacturing is provided in detail which gives a total budgeted cost of
Explanation of Solution
Standard cost budget for May manufacturing is given below:
McAlister's Bottle Company | |||
Standard cost budget | |||
For the months ending in May | |||
Cost category | Standard cost per two-Liter bottle (A) | Budgeted Production (B) | Total Budgeted Cost(AxB)/ |
Direct Labor | | | |
Direct Material | | | |
Factory Overhead | | | |
Total | |
(b)
Concept Introduction:
Standard cost is an accounting system which is used by manufacturers to know the difference between actual cost and standard cost of product.
To Prepare:
A Budget performance report for
Answer to Problem 13.19E
A budget performance report for manufacturing costs, showing total cost variances for direct materials, direct labour and factory overhead for may is provided in detail.
Explanation of Solution
Comparison of flexible budget with actual expenditure is as follows:
McAlister's Bottle Company | |||
Standard cost budget | |||
For the months ending in May | |||
Cost category | Actual cost | Standard cost at actual volume ( Bottles) (Note 1) | Cost Variance(Favorable)/ Unfavorable |
Direct Labor | | | |
Direct Material | | | |
Factory Overhead | | | |
Total | | | |
Note 1 − Computation of standard cost at actual production:
Direct Labor:
Direct Material:
Factory overhead:
(c)
Concept Introduction:
Standard cost is an accounting system which is used by manufacturers to know the difference between actual cost and standard cost of product.
Interpret the budget performance report.
Answer to Problem 13.19E
A detailed budget performance report analsis is provided and discussed.
Explanation of Solution
At the actual volume the actual cost is more than standard cost for all the three components. The cost is over
To control direct labor cost skill workers should be appointed for the manufacturing process and proper training should be given to reduce the direct labor cost. The working environment should be good to reduce the turnover cost.
To control direct material cost, management should ensure the quality of the material and ration of input and output should be proper and waste should not be more than tolerance level.
To control factory overhead method used by management should be as per plan.
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Chapter 13 Solutions
Survey of Accounting (Accounting I)
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- Budgeted income statement and supporting budgets for three months Bellaire Inc. gathered the following data for use in developing the budgets for the first quarter (January, February, March) of its fiscal year: Estimated sales at 125 per unit: Estimated finished goods inventories: Work in process inventories are estimated to be insignificant (zero). Estimated direct materials inventories: Manufacturing costs: Selling expenses: Instructions Prepare the following budgets using one column for each month and a total column for the first quarter, as shown for the sales budget: Prepare a sales budget for March. Prepare a production budget for March. Prepare a direct materials purchases budget for March. Prepare a direct labor cost budget for March. Prepare a factory overhead cost budget for March. Prepare a cost of goods sold budget for March. Prepare a selling and administrative expenses budget for March. Prepare a budgeted income statement with budgeted operating income for March.arrow_forwardCloud Shoes manufactures recovery sandals and is planning on producing 12.000 units in March and 11,500 in April. Each sandal requires 1.2 yards if material, which costs $3.00 per yard. The companys policy is to have enough material on hand to equal 15% of next months production needs and to maintain a finished goods inventory equal to 20% of the next months production needs. What is the budgeted cost of purchases for March?arrow_forwardUse the following information for Exercises 9-63 and 9-64: Palladium Inc. produces a variety of household cleaning products. Palladiums controller has developed standard costs for the following four overhead items: Next year, Palladium expects production to require 90,000 direct labor hours. Exercise 9-63 Flexible Budget for Various Levels of Activity Refer to the information for Palladium Inc. above. Required: 1. Prepare an overhead budget for the expected level of direct labor hours for the coming year. 2. Prepare an overhead budget that reflects production that is 15% higher than expected and for production that is 15% lower than expected.arrow_forward
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