Lusher Corporation Manufactures One Product

Essay

Lusher Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows:
The company calculated the following variances for the year:
The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $94,325 and budgeted activity of 17,150 hours.
During the year, the company completed the following transactions:Purchased 44,350 kilos of raw material at a price of $5.50 per kilo.Used 39,500 kilos of the raw material to produce 26,400 units of work in process.Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 19,680 hours at an average cost of $23.20 per hour.Applied fixed overhead to the 26,400 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $115,250. Of this total, $40,250 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $75,000 related to depreciation of manufacturing equipment.Transferred 26,400 units from work in process to finished goods.Sold for cash 29,200 units to customers at a price of $33.60 per unit.Completed and transferred the standard cost associated with the 29,200 units sold from finished goods to cost of goods sold.Paid $171,000 of selling and administrative expenses.Closed all standard cost variances to cost of goods sold.Required:1. Record the above transactions in the worksheet that appears below. The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net).
2. Determine the ending balance (e.g., 12/31 balance) in each account.3. Prepare an income statement for the year.