Exercise 2516 Fisk Company uses a standard cost accounting s

Exercise 25-16 Fisk Company uses a standard cost accounting system. During January, the company reported the following manufacturing variances. Materials price variance $1,400 U Labor quantity variance $950 U Materials quantity variance 780 F Overhead variance Labor price variance 700 U 520 U In addition, 8,870 units of product were sold at $7 per unit. Each unit sold had a standard cost of $4. Selling and administrative expenses were $7,410 for the month Prepare an income statement for management for the month ended January 31, 2017. FISK COMPANY Income Statement

Solution

FISK COMPANY Income statement Sales (8870*7) 62090 Less: Cost of goods sold (8870*4) 35480 Gross profit (Standard) 26610 Adj: Variances Materials price variance -1400 Materials quantity variance 780 Labor price variance -520 Labor quantity variance -950 Overhead variance -700 -2790 Gross profit (Actual) 29400 Less: Selling and administrative expenses 7410 Net income 21990