Comparison of Full- Absorption and Variable Cost Flows with Overhead Variances: Okanagan Products manufactures Ogo Pogos, a line of stuffed toys. Variable manufacturing overhead is applied at the rate of $1.20 per labor-hour, and fixed manufacturing overhead at a rate of $1.80 per labor-hour. Actual costs were as follows:

During the period, 25,000 units were produced, and 23,800 units were sold at a selling price of $20 each.

a. Use T-accounts to trace the cost flows using variable costing.

b. Use T-accounts to trace the cost flows using full-absorption costing.

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Direct materials Direct labor (at $4.20 per hour) Actual variable manufacturing overhead Variable marketing and administrative costs - Actual fixed manufacturing overhead Fixed marketing and administrative costs $ 50,000 126,000 40,000 45,000 52,000 28,000