XYZ Company Ltd. manufactures leather. Management has recently established a standard cost system in order to control costs and, to set the selling price of its leather at 120 percent of standard cost.

The standard cost per unit based on a monthly production of 1,500 units is as follows:

Raw materials, 10 parts per unit @ $1.10 per part

Direct labour, 3 hours per unit @ $4.50 per hour

Manufacturing overhead:

Variable: $1.30 per direct labour hour

Fixed: $3.10 per direct labour hour

During the month of February, 1,200 units were put into production and completed. The company accountant has gathered the following additional information concerning production:

1. Raw material purchases: 20,000 parts for a total cost of $21,200
2. Raw materials: 16,000 parts used
3. Direct labour: cost for the month - $18,000
4. Actual direct labour hours: 3,000 hours
5. Manufacturing overhead incurred for the month: Variable $4,800 Fixed: $12,000

REQUIRED:

1. Determine the unit-selling price.
2. Determine the variances resulting from production for the month of February for direct materials, direct labour, variable overhead and fixed overhead.
3. Do journal entries to:
   1. record the incurrence of fixed manufacturing overhead.
   2. record the allocation of fixed manufacturing overhead.
   3. close the accounts and record the variances.