Phoenix Company manufactures only one product and uses a standard cost system. The company uses a plant wide predetermined overhead rate that relies on direct labor-hours as the allocation base. The predetermined overhead rate is based on a cost formula that estimated $2,880,000 of fixed and variable manufacturing overhead for an estimated allocation base of 240,000 direct labor-hours. Phoenix does not maintain any beginning or ending work in process inventory.

The company's beginning balance sheet is as follows:

                                  Phoenix Company

                                     Balance Sheet

                                          1/1/XX

                                 (Dollars in thousands)

Assets

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,200

Raw materials inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 300

Finished goods inventory . . . . . . . . . . . . . . . . . . . . . . . . . 540

All other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,040

Liabilities and Equity

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,040

Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . $ 14,040

The company's standard cost card for its only product is as follows:

During the year Phoenix completed the following transactions:
a. Purchased (with cash) 460,000 pounds of raw material at a price of $26.50 per pound.
b. Added 430,000 pounds of raw material to work in process to produce 125,000 units.
c. Assigned direct labor costs to work in process. The direct laborers (who were paid in cash) worked 265,000 hours at an average cost of $15.00 per hour to manufacture 125,000 units.
d. Applied variable manufacturing overhead to work in process inventory using the variable portion of the predetermined overhead rate multiplied by the number of direct labor-hours allowed to manufacture 125,000 units. Actual variable manufacturing overhead costs for the year (all paid in cash) were $480,000.
e. Applied fixed manufacturing overhead to work in process inventory using the fixed portion of the predetermined overhead rate multiplied by the number of direct labor-hours allowed to manufacture 125,000 units. Actual fixed manufacturing overhead costs for the year were $2,450,000. Of this total, $1,300,000 related to items such as insurance, utilities, and salaried indirect laborers that were all paid in cash and $1,150,000 related to depreciation of equipment.
f. Transferred 125,000 units from work in process to finished goods.
g. Sold (for cash) 123,000 units to customers at a price of $175 per unit.
h. Transferred the standard cost associated with the 123,000 units sold from finished goods to cost of goods sold.
i. Paid $3,300,000 of selling and administrative expenses.
j. Closed all standard cost variances to cost of goods sold.
Required:
1. Compute all direct materials, direct labor, variable overhead, and fixed overhead variances for the year.
2. Using Exhibit 10B-3 as a guide, record transactions a through j for Phoenix Company.
Exhibit 10 B - 3: Dylan Corporation: The Transaction Template

3. Compute the ending balances for Phoenix Company's balance sheet.
4. Using Exhibit 10B-5 as a guide, prepare Phoenix Company's income statement for the year.
Exhibit 10 B - 5: Dylan Corporation: Income Statement

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Standard Quantity or HoursS Standard Price or Rate Cost Inputs Direct materials Direct labor 3 pounds $25.00 per pound 2.00 hours 2.00 hours 2.00 hours $16.00 per hour $2.00 per hour $10.00 per hour 75.00 32.00 4.00 20.00 $131.00 Fixed manufacturing overhead Total standard cost per unit F |G| H Dylan Corporation Transaction Analysis For the Year Ended 12/31/xx (dollars in thousands) Fixed Fixed Materials Materials Labor Labor Overhead Overhead Raw Work In Finished PP&E Cash Materials Process Goods (net) Price Quity Rate Efficency Budget Volume Retained variance variance variance variance variance variance Earnings 714 $ 5,200$$$7414 7 1/1 $1,100 400 9 b. 10 C 13 f. 14 g 15 h. 16 . 17 12/31 14-İ+Mt Exhibit 108-rEt it t08-2 Exhibit 10B3 / Exhibit 1084%-E hbit 108 5 Dylan Corporation Income Statement For Year Ended 12/31/Xx (dollars in thousands) 2 4. 6 Sales 7 Cost of goods sold at standard 8 Total variance adjustments 9 Cost of goods sold 10 Gross margin 11 Selling and administrative expenses 12 Net operating income 13 4 Exhibi 10B-4 Exhibit 10B-5 s 5,270 S 4,335 36 4,371 899 450 S 449