Consider the following information: Requirement Use the previous information to

ID: 2485136 • Letter: C

Question

Consider the following information:

Requirement

Use the previous information to prepare a standard cost income statement for Goldman, using the following figure as a guide. Remember that unfavorable variances are added to cost of goods sold.

Cost of goods sold Sales revenue Direct materials price variance Direct materials efficiency variance Direct labor price variance $16,500 F $3,300 U $11,700 F $71,000 $362,000 Direct labor efficiency variance $530,000 O Overhead flexible budget variance 7,200 U Production volume variance $2,200 U Marketing and administrative costs were $45,000 U

Explanation / Answer

Goldman Inc.

Standard cost income statement

Sales revenue

$5,30,000.00

Cost of goods sold at standard cost

$3,62,000.00

Manufacturing cost variances:

Direct materials price variance

$7,200.00

Direct materials efficiency variance

$2,200.00

Dierct labor price variance

$45,000.00

Direct labor efficiency variance

-$16,500.00

Overhead flexible budget variance

$3,300.00

Production volume variance

-$11,700.00

Total Manufacturing variances

$29,500.00

Cost of goods sold at actual cost

$3,91,500.00

Gross profit

$1,38,500.00

Marketing and administrative costs

-$71,000.00

Operating income

$67,500.00