Variance analysis: materials, labor, factory overhead; income statement. The following information concerns Boris Logan Company, which manufactures one product and uses a standard costing system:

Standard cost per unit:



Actual production—11,000 units

Materials purchased—50 000 liters @ $1.90; purchases are recorded at standard cost Direct labor (23,000 hours)—$193,200

Depreciation of factory building and equipment—$10,000

Sales salaries-$12,000

Insurance: factory—$2,000; office—$200

Sales—9,000 units @ $45

Indirect labor (includes $25,000 fixed) — $60,000

Normal capacity—10,000 units or 20,000 direct labor hours

Heat and light—office—$800

Heat, light, and power—factory—$11,000 (includes $4,000 fixed)

Advertising—$8,000

Materials used—35 000 liters

Office supplies used—$500

Administrative salaries—$14,000

Depreciation of office building—$1,000

Indirect factory materials used (variable)—$20,000

Delivery expense—$4,000

Required:

(1) Prepare an analysis of the materials, direct labor, and factory overhead variances, using the three-variance method A for factory overhead.

(2) Prepare an income statement, supported by a schedule of variances and treating all variances as period costs. (CGAAC adapted)