4. Country Designs is a manufacturer of large flower pots for urban Prepare a st

Question

4. Country Designs is a manufacturer of large flower pots for urban Prepare a standard cost income statement for the company's settings. The company has these standards 1(Click the icon to view the standards.) 2 (Click the icon to view the actual results.) 3(Click the icon to view related variances) management. Assume that sales were $650,000 and actual marketing and administrative expenses were $78,000. (Use a minus sign or parentheses for favorable variances) Country Designs Standard Cost Income Statement Month Ended Manufacturing cost variances: U/F (10 (12] (14) (16 (18 (13) (17) Total manufacturing variances (20) (19) Gross profit (actual)

Explanation / Answer

Note: Favorable variances are deducted while unfavorable variances are added to the standard cost of goods sold to arrive at the actual cost of goods sold.

Country Designs Standard Cost Income Statement Month Ended (1) Sales revenue at actual 650000 (2) Cost of goods sold at standard 244400 Manufacturing cost variances: U/F (3) DM price variance 9255 U (5) DM quantity variance 3640 U (7) DL rate variance 5850 F (9) DL efficiency variance 11050 U (11) Variable MOH rate variance 1170 U (13) Variable MOH efficiency variance 4550 U (15) Fixed MOH budget variance 500 F (17) Fixed MOH volume variance 2000 F Total manufacturing variances 21315 U (20) Cost of goods sold (at actual) 265715 Gross profit (actual) 384285 (21) Marketing and administrative expenses 78000 Operating income (loss) 306285

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