Problem 10B-6 Transaction Analysis; Income Statement Preparation [LO10-1, LO10-2, LO10-3, LO10-4, LO10-5] Phoenix Company manufactures only one product and uses a standard cost system. The company uses a plantwide predetermined overhead rate that relies on direct labor-hours as the allocation base. The predetermined overhead rate is based on a cost formula that estimated $2,880,000 of fixed and variable manufacturing overhead for an estimated allocation base of 240,000 direct labor-hours. Phoenix does not maintain any beginning or ending work in process inventory. The companys beginning balance sheet is as follows: Phoenix Company Balance Sheet 1/1/XX (dollars in thousands) Assets Cash $ 1,200 Raw materials inventory 300 Finished goods inventory 540 All other assets 12,000 Total assets $ 14,040 Liabilities and Equity Retained earnings $ 14,040 Total liabilities and equity $ 14,040 The companys standard cost card for its only product is as follows: Inputs (1) Standard Quantity or Hours (2) Standard Price or Rate Standard Cost (1) (2) Direct materials 3 pounds $ 25.00 per pound $ 75.00 Direct labor 2.00 hours $ 16.00 per hour 32.00 Variable manufacturing overhead 2.00 hours $ 2.00 per hour 4.00 Fixed manufacturing overhead 2.00 hours $ 10.00 per hour 20.00 Total standard cost per unit $ 131.00 During the year Phoenix completed the following transactions: Purchased (with cash) 460,000 pounds of raw material at a price of $26.50 per pound. Added 430,000 pounds of raw material to work in process to produce 125,000 units. Assigned direct labor costs to work in process. The direct laborers (who were paid in cash) worked 265,000 hours at an average cost of $15.00 per hour to manufacture 125,000 units. Applied variable manufacturing overhead to work in process inventory using the variable portion of the predetermined overhead rate multiplied by the number of direct labor-hours allowed to manufacture 125,000 units. Actual variable manufacturing overhead costs for the year (all paid in cash) were $480,000. Applied fixed manufacturing overhead to work in process inventory using the fixed portion of the predetermined overhead rate multiplied by the number of direct labor-hours allowed to manufacture 125,000 units. Actual fixed manufacturing overhead costs for the year were $2,450,000. Of this total, $1,300,000 related to items such as insurance, utilities, and salaried indirect laborers that were all paid in cash and $1,150,000 related to depreciation of equipment. Transferred 125,000 units from work in process to finished goods. Sold (for cash) 123,000 units to customers at a price of $175 per unit. Transferred the standard cost associated with the 123,000 units sold from finished goods to cost of goods sold. Paid $3,300,000 of selling and administrative expenses. Closed all standard cost variances to cost of goods sold. Required: 1. Compute all direct materials, direct labor, variable overhead, and fixed overhead variances for the year. 2. Record transactions a through j for Phoenix Company. 3. Compute the ending balances for Phoenix Companys balance sheet. 4. Prepare Phoenix Companys income statement for the year.