Manufacturing Company manufactures product AB in a process which involves two departments, Department A and Department B. Units are transferred from Department A to Department B and from Department B to the Finished Goods Storeroom.

In Department B, units are inspected at the end of the process, and material is added only to those units that pass inspection. All spoilage is considered to be normal. The company uses a standard cost system; therefore, the cost of normal spoilage becomes a part of the computed standard cost variances. Steeler Manufacturing has set the following standards for Department B:

Normal capacity is 17,000 units of product AB (34,000 direct labor hours). The following information pertains to April:

Required:

(1) Compute the equivalent production for prior department costs, materials, and conversion costs for the month of April.

(2) Compute two variances each for materials and labor, and compute three variances for factory overhead using method B. Indicate whether variances are favorable or unfavorable. (CGAAC adapted)

Standard Cost for One Unit of Product AB: Materials. Direct labor. 1 pound (a) $1.90=$1.90 Variable overhead. 2 hours a $8.00=16.00 Fixed overhead. 2 hours (a) $.75=1.50 2 hours (a) $1.50=$22.403.00 Beginning inventory ( 50% complete), 2,000 units........... $28,800 Received from Department A,18,000 units. 190,100 Transferred to Finished Goods, 15,000 units Ending inventory ( 75% complete), 4,000 units Costs added in Department B this period: Materials (14,800 lbs. @ $2.00 actual cost). Direct labor (38,000 hours @ \$7.80). Variable factory overhead.. Fixed factory overhead. 29,600 296,400 28,000 56,500