Use the variance calculations in exercise 20.21. Prorate the variations to ending Finished Goods Inventory (20%) and Cost of Goods Sold (80%).

Armadillo Corporation acquired 50,000 units of direct materials for $70,000 last year.

The standard price paid for the materials was $1 .30 per unit. During last year. 45,000 units of materials were used in the production process. Materials are entered into production at the beginning of the process. The standard allowed was 48,000 units for the amount of output that was actually produced. Eighty percent of the units that used these materials were completed and transferred to Finished Goods Inventory.

Sixty percent of these units that had been transferred to Finished Goods Inventory were sold this period. There were no beginning inventories.

Prepare journal entries and show the flow of costs through T-accounts.