P1. Beverage Products, LLC, manufactures metal beverage containers. The division

Question

P1. Beverage Products, LLC, manufactures metal beverage containers. The division that manufactures soft-drink beverage cans for the North American market has two plants that operate 24 hours a day, 365 days a year. The plants are evaluated as cost centers. Small tools and supplies are considered variable overhead. Depreciation and rent are considered fixed overhead. The master budget for a plant and the operating results of the two North American plants, East Coast and West Coast, are as follows :

Master Budget East Coast West Coast

Center Cost
Rolled aluminum ($0.01) $ 4,000,000 $3,492,000 $5,040,000
Lids ($0.005) 2,000,000 1,980,000 2,016,000
Direct Labor ($0.0025) 1,000,000 864,000 1,260,000
Small tools and supplies 520,000 432,000 588,000
Depreciation and Rent 480,000 480,000 480,000

Total Cost 8,000,000 7,248,000 9,384,000

Explanation / Answer

Master

Ease Coast

Budget

Actuals

Performance

508000

20000

136000

88000

0

Performance of East Coast :

Master

Ease Coast

Budget

Actuals

Performance

Rolled aluminum 4000000 3492000

508000

Favorable Lids 2000000 1980000

20000

Favorable Direct Labor 1000000 864000

136000

Favorable Small tools and supplies 520000 432000

88000

Favorable Depreciation and Rent 480000 480000

0

Unchanged

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