Flexible Budget, Standard Cost Variances, T-Accounts Ingles Company manufactures external hard drives. At the beginning of the period, the following plans for production and costs were revealed: Units to be produced and sold 25,000 Standard cost per unit: Direct materials $ 10 Direct labor 8 Variable overhead 4 Fixed overhead 3 Total unit cost $ 25 During the year, 24,800 units were produced and sold. The following actual costs were incurred: Direct materials $263,872 Direct labor 204,352 Variable overhead 107,340 Fixed overhead 73,904 There were no beginning or ending inventories direct materials. The direct materials price variance was $9,772 unfavorable. In producing the 24,800 units, a total of 12,772 hours were worked, 3 percent more hours than the standard allowed for the actual output. Overhead costs are applied to production using direct labor hours. 3. Use T-accounts to show the flow of costs through the system. In showing the flow, you do not need to show detailed overhead variances. Show only the over- and underapplied variances for fixed and variable overhead. Record the following transactions in the T- accounts: If an amount is zero, enter "0". (a) purchase of materials, (b) issuance of materials into production, (c) incurrence of direct labor cost, (d) application of variable overhead cost to production, (e) application of fixed overhead cost to production, (f) transfer of finished goods to finished goods inventory, (g) sale of goods, (h) closure of Direct Materials Price Variance account, (i) closure of Direct Materials Usage Variance account, (j) closure of Direct Labor Efficiency Variance account, (k) closure of Variable Overhead Control account, and (1) closure of Fixed Overhead Control account. Materials Work in Process (b) X X Finished Goods X X Direct Materials Price Variance X Direct Materials Usage Variance Accounts Payable a Wages Payable X Direct Labor Rate Variance Direct Labor Efficiency Variance X Variable Overhead Control X Fixed Overhead Control Fixed Overhead Control Cost of Goods Sold Flexible Budget, Standard Cost Variances, T-Accounts Ingles Company manufactures external hard drives. At the beginning of the period, the following plans for production and costs were revealed: Units to be produced and sold 25,000 Standard cost per unit: Direct materials $ 10 Direct labor 8 Variable overhead 4 Fixed overhead 3 Total unit cost $ 25 During the year, 24,800 units were produced and sold. The following actual costs were incurred: Direct materials $263,872 Direct labor 204,352 Variable overhead 107,340 Fixed overhead 73,904 There were no beginning or ending inventories direct materials. The direct materials price variance was $9,772 unfavorable. In producing the 24,800 units, a total of 12,772 hours were worked, 3 percent more hours than the standard allowed for the actual output. Overhead costs are applied to production using direct labor hours. 3. Use T-accounts to show the flow of costs through the system. In showing the flow, you do not need to show detailed overhead variances. Show only the over- and underapplied variances for fixed and variable overhead. Record the following transactions in the T- accounts: If an amount is zero, enter "0". (a) purchase of materials, (b) issuance of materials into production, (c) incurrence of direct labor cost, (d) application of variable overhead cost to production, (e) application of fixed overhead cost to production, (f) transfer of finished goods to finished goods inventory, (g) sale of goods, (h) closure of Direct Materials Price Variance account, (i) closure of Direct Materials Usage Variance account, (j) closure of Direct Labor Efficiency Variance account, (k) closure of Variable Overhead Control account, and (1) closure of Fixed Overhead Control account. Materials Work in Process (b) X X Finished Goods X X Direct Materials Price Variance X Direct Materials Usage Variance Accounts Payable a Wages Payable X Direct Labor Rate Variance Direct Labor Efficiency Variance X Variable Overhead Control X Fixed Overhead Control Fixed Overhead Control Cost of Goods Sold