Compute variances, and prepare income statement

Northend Corporation accumulates the following data relative to jobs started and finished during the month of June 2017.

Cost and Production Data

Actual

Standard

Raw materials unit cost

$2.20

$2.00

Raw materials units used

11,200

10,300

Direct labor payroll

$175,820

$169,830

Direct labor hours worked

14,900

15,300

Manufacturing overhead incurred

$202,750

Manufacturing overhead applied

$206,550

Machine hours expected to be used at normal capacity

43,500

Budgeted fixed overhead for June

$65,250

Variable overhead rate per machine hour

$3.00

Fixed overhead rate per machine hour

$1.50

Overhead is applied on the basis of standard machine hours. 3.00 hours of machine time are

required for each direct labor hour. The jobs were sold for $489,000. Selling and administrative

expenses were $35,800. Assume that the amount of raw materials purchased equaled the amount

used.

Instructions

(a) Compute all of the variances for (1) direct materials and (2) direct labor.

(b) Compute the total overhead variance.

(c) Prepare an income statement for management. (Ignore income taxes.)