Compute Variances and Use T-Accounts to Show Standard Cost Flows: Juneau Company manufactures a line of clothing. At the beginning of the period, there were 1,000 units in stock at a variable cost of $400 per unit. The full-aborption cost of these units is $450 each.

Plans for the period call for the following standards and activity:

During the period, 2,200 units were produced and 1,800 were sold. The following costs were incurred:

Direct materials price variances are recorded at the time of purchase. No materials were purchased this period. Actual direct labor costs were 5 percent less per hour of labor than the standard allowed. Overhead costs are applied to production as a percent of standard direct labor costs. A standard costing system is used.

Required:

a. Compute variable manufacturing cost price and efficiency variances. Compute fixed manufacturing cost, price, and production volume variances.

b. Use T-accounts to show the flow of costs through the system, assuming a traditional FIFO system.

Transcribed Image Text:

Units produced and sold Standard cost per unit: Direct materials Direct labor Overhead Total 2,000 $175 200 100 (60% variable) $475