The standard cost summary for the most popular product of Excelsior Products Company is shown as…

Materials and labor variance analyses

The standard cost summary for the most popular product of Excelsior Products Company is shown as follows, together with production and cost data for the period.

Standard Cost Summary

Materials:

2 gallons of liquid lead@$2.00/gallon

$4.00

$10.00

2 gallons of varnish@$3.00/gallon

$6.00

Labor:

1 hour@$12.00/hour

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.

Required:

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.