The Sussiny Corporation uses a standard costing system in its process cost facility, which manufactures a product called Wikum. Material A is added at the beginning of the process and Material B is added only to good units immediately after they have been inspected. Inspection takes place at the end of machine conversion when 70% of labor has been incurred. All spoilage is considered abnormal. The standard cost card for one unit of Wikum follows:

The following additional information is available for the current period:
(a) 5,000 machine hours were budgeted for the period, and the factory overhead rate was based on budgeted capacity.
(b) Work in process beginning inventory had 500 units, 70% complete with respect to labor and 50% complete with respect to machining.
(c) Work in process ending inventory had 600 units, 90% complete with respect to labor and 100% complete with respect to machining.
(d) 4,600 units were transferred to finished goods and 200 units were spoiled.
(e) Materials inventory records indicate the following:

(f) 2,550 direct labor hours were worked at a total cost of $26,010.
(g) 5,300 actual machine hours were used, and actual factory overhead totaled $75,000.
Required:
(1) Compute the number of equivalent units and the standard quantity allowed for each element of cost.
(2) Compute two standard cost variances for each element of cost (that is, materials purchase price and quantity variances, labor rate and efficiency variances, and factory overhead controllable and volume variances). Indicate whether each variance is favorable or unfavorable.
(3) Determine the standard cost of the units transferred to finished goods, the spoilage charged to factory overhead control, and work in process ending inventory.

Transcribed Image Text:

Direct materials: A (3 units at $4.50 each) g 2 units at 2.00 at SA 50 each) $13.50 4.00 5.00 Direct labor (1/2 hour at $10.00 per hour). Factory overhead: Variable (1 hour at $5.00 per machine hour). Fixed (1 hour at $10.00 per machine hour). 5.00 10.00 $37.50 Quantity Actual Quantity Material Purchased Unit Cost Used 14,800 11,000 $4.60 16,000 12,000 1.95