Grindle Corporation uses the following standard costs in accounting for its only product:
Materials: 3 liters x $4$12.00
Direct labor: 1/2 hour x $73.50
Variable factory overhead: 1/2 hour x $6 3.00
Fixed factory overhead: 1/2 hour x $94.50
Total standard cost .......................................... $23.00
Fixed factory overhead budgeted was $49,500 per month. Actual activity for November was as follows :
(a) 40 000 liters of material were purchased on account for $159,200. The related price variance is recorded at the time of purchase.
(b) 10,000 units were produced.
(c) There was no work in process at the beginning or end of November.
(d) 31 000 liters of material were issued to production.
(e) The direct labor payroll to be distributed (credit the payroll account) is $35,616 for 4,800 hours.
(f) Actual factory overhead cost of $80,300 was incurred.
(g) 8,000 units were sold on account at $40 each.
(h) Marketing and administrative expenses of $50,000 were incurred.
Required:
(1) Prepare journal entries to record the November activity. (Ignore overhead variances.)
(2) Prepare a three-variance analysis of under- or over applied factory overhead.
(3) Prepare an income statement, assuming that all variances are to be closed to Cost of Goods Sold.