Reference no: EM132214007

Question: Butrico Manufacturing Corporation uses a standard cost system, records materials price variances when direct materials are purchased, and prorates all variances at year-end. Variances associated with direct materials are prorated based on the balances of direct materials in the appropriate accounts, and variances associated with direct labor and manufacturing overhead are prorated to Finished Goods Inventory and to Cost of Goods Sold (CGS) on the basis of the relative direct labor cost in these accounts at year-end.

The following information is for the year ended December 31:

The company had no beginning inventories and no ending Work-in-Process (WIP) Inventory. It applies manufacturing overhead at 80% of standard direct labor cost.

Finished goods inventory at 12/31:

Direct materials $ 85,800

Direct labor 130,200

Applied manufacturing overhead 104,700

Direct materials inventory at 12/31 65,300

Cost of goods sold for the year ended 12/31:

Direct materials $ 354,000

Direct labor 741,000

Applied manufacturing overhead 592,800

Direct materials price variance (unfavorable) 11,500

Direct materials usage variance (favorable) 15,300

Direct labor rate variance (unfavorable) 19,700

Direct labor efficiency variance (favorable) 5,600

Actual manufacturing overhead incurred 691,800

Required: 1. Compute the amount of Direct Materials Price Variance to be prorated to Finished Goods Inventory at December 31.

2. Compute the total amount of direct materials cost in the Finished Goods Inventory at December 31, after all materials variances have been prorated.

3. Compute the total amount of direct labor cost in the Finished Goods Inventory at December 31, after all variances have been prorated.

4. Compute the total Cost of Goods Sold (CGS) for the year ended December 31, after all variances have been prorated.