P12-42A (SO 2, 3, 4) Calculate variances and prepare an income statement. Soriano...
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Accounting
P12-42A
(SO 2, 3, 4)
Calculate variances and prepare an income statement.
Soriano Manufacturing Company uses a standard cost accounting system to account for the manufacturing of exhaust fans. In July 2016, it accumulates the following data for 1,500 units started and finished:
| Cost and Production Data | Actual | Standard |
|---|---|---|
| Raw materials |
|
|
| Units purchased | 21,000 |
|
| Units used | 21,000 | 22,000 |
| Unit cost | $3.40 | $3.00 |
| Direct labour |
|
|
| Hours worked | 3,450 | 3,600 |
| Hourly rate | $11.80 | $12.50 |
| Manufacturing overhead |
|
|
| Incurred | $101,500 |
|
| Applied |
| $108,000 |
Manufacturing overhead was applied based on direct labour hours. Normal capacity for the month was 3,400 direct labour hours. At normal capacity, budgeted overhead costs were $20 per labour hour variable and $10.00 per labour hour fixed. Total budgeted fixed overhead costs were $34,000.
Jobs finished during the month were sold for $280,000. Selling and administrative expenses were $25,000.
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