Lo-bed Company produces a product that requires two standard gallons per unit. T

Question

Lo-bed Company produces a product that requires two standard gallons per unit. The standard price is $20.00 per gallon. Assume the company produced 4,000 units of product. The 4,000 units required 8,200 gallons, which were purchased at $19.75 per gallon. The product requires four standard hours per unit at a standard hourly rate of $28.00 per hour. The 4,000 units required 16,750 hours at an hourly rate of $28.40 per hour. The standard variable overhead cost per unit is $3.00 per hour. The actual variable factory overhead was $51, 240. The standard fixed overhead cost per unit is $1.20 per hour at 16,400 hours, which is 100% of normal capacity. Prepare a 2016 income statement through gross profit for Lo-bed Company. Enter all amounts as positive numbers except favorable variances.

Explanation / Answer

Answer:

Lo Bed Company Income Statement through Gross Profit For the year ended December 31,2016 Particulars Amount ($) Sales (4000*250) 1000000 COGS-at standard 675200 Gross Profit at standard 324800 Favorable Unfavorable Less: variances from standard cost: Direct material price 2050 Direct material Quantity 4000 Direct labor rate 6700 Direct labor time 21000 Factory overhead controllable 3240 Factory overhead volume 480 33370 Gross Profit-Actual 291430 COGS-At standard Direct material (4000*2*$20) 160000 Direct labor (4000*4*$28) 448000 Factory overhead (4000*4($3+$1.2) 67200 Total COGS 675200

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