Principles of Cost Accounting P8-7 The standard cost summary for the most popular product of Phase

Principles of Cost Accounting

P8-7 Materials and labor variance analyses (similar to Self-Study Problem 1)
The standard cost summary for the most popular product of Phase-Five Products Company is shown as follows, together with production and cost data for the period.
Standard Cost Summary
2 gallons of liquid [email protected]$2.00 4.00
2 gallons of [email protected]$3.00 6.00 10.00
1 [email protected]$12.00 12.00
Factory overhead:
$1.00 per direct labor hour 1.00
Total standard unit cost 23.00

Production and Cost Summary
Units completed during the month 9,000
Ending units in process (one-fourth completed) 2,000
Gallons of liquid lead used 21,000
Gallons of varnish used 20,000
Direct labor hours worked 10,000
Cost of liquid lead used 41,160
Cost of varnish used 60,000
Cost of direct labor 117,000
One gallon each of liquid lead and varnish are added at the start of processing. The balance of the materials is added when the process is two-thirds complete. Labor and overhead are added evenly throughout the process.

1. Calculate equivalent production. (Be sure to refer to the standard cost summary to help determine the percentage of materials in ending work in process.)
2. Calculate materials and labor variances and indicate whether they are favorable or unfavorable.
3. Determine the cost of materials and labor in the work in process account at the end of the month.
4. Prove that all materials and labor costs have been accounted for.
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