Prorate Labor Variances: Nanron Company has a traditional process standard cost system for all its products. All inventories are carried at standard during the year. The inventories and cost of goods sold are adjusted for all variances considered material in amount for financial statement purposes. All products are considered to flow through the manufacturing process to finished goods and ultimate sale in a FIFO pattern. The standard cost of one of Nanron's products manufactured in the Dixon Plant, unchanged from the prior year, is shown below.

There is no work in process inventory of this product due to the nature of the product and the manufacturing process. The schedule below reports the manufacturing and sales activity measured at standard cost for the current fiscal year

Manufacturing performance relative to standard costs both this year and last year was not good. The balance of the finished goods inventory. $140,800, reported on the balance sheet at the beginning of the year included a $5,800 proration adjustment for unfavorable variances from standard cost. The unfavorable standard cost variances for labor for the current fiscal year consisted of a wage rate variance of $32,000 and a labor efficiency variance of $20,000 (2,500 hours at $8). There were no other variances from standard cost for this year.

Required: Adjust the inventories and cost of goods sold to reflect actual costs.

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Direct materials Direct labor (.5 direct labor-hour at $8) Manufacturing overhead Total standard cost $2 4 3. $9