From the text: Cost Accounting (17th Edition) by Edward J. Vanderbeck and Maria R. Mitchell

Problem 8-7 (page 472-3) Materials & Labor Variance analyses

The standard cost summary for the most popular product of Phenom Products Co. is shown as follows, together with production and cost data for the period.

Standard Cost Summary

Materials:
2 gallons of liquid lead @ $2	$4.00
2 gallons of varnish @ $3	$6.00	$10.00
Labor:
1 hour @ $12		$12.00
Factory Overhead:
$1.00 per direct labor hour		$1.00
Total standard unit cost		$23.00

Production and Cost Summary

Units completed during the month		9,000
Ending units in process (1/4 completed)		2,000
Gallons of liquid lead used		21,000
Gallons of varnish used		20,000
Direct labor hours worked		10,000
Cost of liquid lead used		$ 41,160
Cost of varnish used		$ 60,000
Cost of direct labor		$ 117,000

One gallon each of liquid lead and varnish are added at the start of processing. The balance of the materials is added when the process is 2/3rds complete. Labor and overhead are added evenly throughout the process. There were no units in process at the beginning of the month.

Required:

Calculate equivalent production for materials, labor, and overhead. (Be sure to refer to the standard cost summary to help determine the percentage of materials in ending work in process.)

Calculate materials and labor variances and indicate whether they are favorable or unfavorable, using the diagram format shown in Figure 8-4.

Determine the cost of materials and labor in the work in process account at the end of the month.