Marina del rey manufacturing corp. uses a standard cost system that records raw materials at actual cost, records materials price variances at the time that raw materials are issued to work in process, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the direct materials balances in the appropriate accounts, and variances assosciated with direct lbor are prorated based on the direct labor balances in the appropriate accounts. The following is information is avalable for marina del rey for the year ended December 31:
Raw materials inventory at dec. 31 is 65000, finished goods inventory at dec 31: direct materials was 87000, direct labor was 130500, applied factory overhead:104400; cost of goods sold for the year eneded dec 31: direct materials:348000, direct labor:739500, applied factory overhead:591600;
- materials quantity variance favorable:15000
- materials price variance unfavorable:10000
- labor efficiency variances favorable:5000
- labor rate variance unfavorable:20000
- factory overhead applied:696000
- There were no beginning inventories and no ending work in process.
Caculate the following:
1 Amount of materials price variance to be prorated to finished goodsinventory at dec 31(hint: you must first determine the ratio of direct materials cost in the ending finished goods inventory)
2 Total amount of direct materials cost in the finished goods inventory at dec 31, after all variances have been prorated.
3Total amount of direct labor cost in the finished goods inventory at dec 31, after all variances have been prorated.
4 Total costs of goods sold for the year ended dec 31, after all variances have been prorated.