Explain with examples, the following components of cost in manufacturing accounts:

A) direct material cost;     B) direct labour cost C) factory overhead

Which of the following is an example of a factory overhead cost?

a. Direct material cost

b. Depreciation of factory buildings

c. Direct labor cost

d. Direct expenses

Discuss the components of each of the following manufacturingcost budgets (What each budget proposes to do or accomplish and theelements):

1. Production Budget

2. Direct materials purchases budget

3. Direct labor budget

4. Factory overhead budget

5. Cost of goods manufactured budget

6. Cost of goods sold budget

Genie in a Bottle Company (GBC) 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 $3.00
Direct materials 9.00
Factory overhead 0.60
Total $12.60

At the beginning of July, GBC management planned to produce 385,000 bottles. The actual number of bottles produced for July was 389,000 bottles. The actual costs for July of the current year were as follows:

Cost Category Actual Cost for the Month Ended July 31
Direct labor $11,150
Direct materials 33,819
Factory overhead 2,802
Total $47,771

Required:
A. Prepare the July manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for GBC, assuming planned production.
B. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
C. Interpret the budget performance report.

A. Prepare the July manufacturing standard cost budget (direct labor, direct materials, and factory overhead) for GBC, assuming planned production.

Genie in a Bottle Company
Manufacturing Cost Budget
For the Month Ended July 31, 2016

1
Manufacturing Costs
Standard Cost at Planned Volume (385,000 Bottles)
2
Direct labor
3
Direct materials
4
Factory overhead
5
Total

B. Prepare a budget performance report for manufacturing costs, showing the total cost variances for direct materials, direct labor, and factory overhead for July. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Genie in a Bottle Company
Budget Performance Report
For the Month Ended July 31, 2016

1
Manufacturing Costs
Actual Costs
Standard Cost at Actual Volume (389,000 Bottles)
Cost Variance—(Favorable) Unfavorable
2
Direct labor
3
Direct materials
4
Factory overhead
5
Total manufacturing costs

C. Interpret the budget performance report.
The Company's actual costs were $1,243 budgeted. direct labor and direct material cost variances more than offset a small factory overhead cost variance.