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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