Springsteen Company manufactures guitars. The company uses a standard, Job-order cost-accounting system in two production departments. In the Construction Department, the wooden guitars are built by highly skilled craftsmen and coated with several layers of lacquer. Then the units are transferred to the Finishing Department, where the bridge of the guitar is attached and the strings are installed. The guitars also are tuned and inspected in the Finishing Department. The diagram below depicts the production process. Construction Department (Basic guitar built from veneered wood.) Finishing Department (Bridge and strings attached; guitar tuned and Inspected.) Each finished guitar contains seven pounds of veneered wood. In addition, one pound of wood is typically wasted in the production process. The veneered wood used in the guitars has a standard price of $12 per pound. The other parts needed to complete each guitar, such as the bridge and strings, cost $15 per guitar. The labor standards for Springsteen's two production departments are as follows: Construction Department: 5 hours of direct labor at $21 per hour Finishing Department: 3 hours of direct labor at $15 per hour The following pertains to the month of July. 1. There were no beginning or ending work-in-process inventories in either production department. 2. There was no beginning finished-goods inventory. 3. Actual production was 580 guitars, and 380 guitars were sold on account for $440 each. 4. The company purchased 6,800 pounds of veneered wood at a price of $12.50 per pound. 5. Actual usage of veneered wood was 5,300 pounds of the wood purchased during July. 6. Enough parts (bridges and strings) to finish 680 guitars were purchased at a cost of $9,080. 7. The Construction Department used 2,700 direct-labor hours. The total direct-labor cost in the Construction Department was $54,000. 8. The Finishing Department used 1,800 direct-labor hours. The total direct-labor cost in that department was $28,800. 9. There were no direct-material variances in the Finishing Department. 3. Complete the following cost variance report for July. Springsteen Company Investigates all variances greater than $5,000 or 5% (Use Exhibit 10-5) (Indicate the effect of each variance by selecting "Favorable" or "Unfavorable". Select "None" and enter "O" for no effect (Le., zero varlance). Round "Percentage of Standard Cost" to 2 decimal places.) SPRINGSTEEN COMPANY Cost Veriance Report For the Month of July Construction Department Finishing Department Amount Percentage of Standard Cost Verlance Investigation Required Amount Percentage of Standard Cont Requ Direct material Standard cost, given actual output $ 55,680 $ 8,700) Direct-material price variance 2,650 Unfavorable % No None % No Direct-material quantity variance Unfavorable % Yes None % No Direct-material purchase price variance 3,400 Unfavorable % Yes None % No Direct labor Standard cost, given actual output $ 60,900 26,100 Direct-labor rate variance 2,700 Favorable % No 1,000 Unfavorable % Yes Direct-labor efficiency variance 4,200 Favorable % No 900 Unfavorable %No