Leesville Corporation manufactures Product G, which sells for $25 per unit. Material M is added before processing starts, and labor and overhead are added evenly during the manufacturing process. Production capacity is budgeted at 110,000 units of G annually. The standard costs per unit of G are as follows:
Direct materials: 2 pounds of material M at $1.50$ 3.00
Direct labor: 1.5 hours at $8 per hour12.00
Factory overhead:
Variable $1.50
Fixed 1.10 2.60
Total standard cost per unit$17.60
A process cost system is used. Inventories are costed at standard cost. All variances from standard costs are charged or credited to Cost of Goods Sold in the year incurred. Inventory data for the year 20A are as follows:

During 20A, 250,000 pounds of M were purchased at an average cost of $1,485 per pound, and 240,000 pounds were transferred to work in process inventory. Direct labor costs amounted to $1,313,760 at an average hourly labor rate of $8.16. Actual factory overhead for 20A was as follows:
Variable $181,500
Fixed 114,000
A total of 110,000 units of G were completed and transferred to finished goods inventory. Marketing and administrative expenses were $680,500.
Required:
Prepare an income statement for 20A, including all manufacturing cost variances and using the two-variance method for factory overhead.

Transcribed Image Text:

January 1 50.000 pounds 10,000 units 20,000 units December 31 60,000 pounds Material M....reststuu. Word in process: All materials, 25 processed All materials, 1/3 processed 15,000 units 12,000 units Finished goods inventory