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P11-2B Huang Company

Price: $2.50

Huang Company uses a standard cost accounting system to account for the manufacture
of exhaust fans. In July 2014, it accumulates the following data relative to 1,800
units started and finished

Manufacturing overhead was applied on the basis of direct labor hours. Normal capacity
for the month was 3,400 direct labor hours. At normal capacity, budgeted overhead costs
were $16 per labor hour variable and $12 per labor hour fixed. Total budgeted fixed overhead
costs were $40,800.
Jobs finished during the month were sold for $270,000. Selling and administrative
expenses were $20,000.

(a) Compute all of the variances for (1) direct materials and (2) direct labor.
(b) Compute the total overhead variance.
(c) Prepare an income statement for management. (Ignore income taxes.)

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