Primm Company produces a product that requires four standard gallons per unit. T

Question

Primm Company produces a product that requires four standard gallons per unit. The standard price is $24.50 per gallon. The 2,500 units required 10,600 gallons, which were purchased at $23.75 per gallon. The product requires three standard hours per unit at a standard hourly rate of $20 per hour. 2,500 units required 7,900 hours at an hourly rate of $21.50 per hour. The standard variable overhead cost per unit is $2.50 per hour. The actual variable factory overhead was $19,050. The standard fixed overhead cost per unit is $1.30 per hour at 7,000 hours, which is 100% of normal capacity. Prepare a 2012 income statement through gross profit for Primm Company. Assume Primm sold 2,500 units at $320 per unit.

Explanation / Answer

(4*24.50 + 3*20 + 7.50 + 3.90)* 2,500= 423,500.

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