Lawrence Company is a manufacturer of contemporary door handles. The vice president of Design attends home shows twice a year so the company can keep current with home trends. Because of its volume, Lawrence uses process costing to account for production. Costs and output figures for August are as follows:
Lawrence Company’s Process Costing for the Month Ended August 31, 2017Standard cost per unitWork in process, beginning inventory (Aug. 1)Degree of completion of beginning work in processStarted in AugustCompleted and transferred outWork in process, ending inventory (Aug. 31)Degree of completion of ending work in processTotal costs added during AugustUnits15,000100,00095,00020,000Direct Materials$5.75$86,250100%100%$569,000Conversion Costs$12.25$55,12530%80%$1,307,240
- Compute equivalent units for direct materials and conversion costs. Show physical units in the first column of your schedule. 2. Compute the total standard costs of handled transferred out in August and the total standard costs of the August 31 inventory of work in process. 3. Compute the total August variances for direct materials and conversion costs. 4. Prepare summarized journal entries to record both the actual costs and standard costs for direct materials and conversion costs, including the variances for both production costs.