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 varlances. Materials price variance 1,370 U Labor quantity varlance $920 U Materials quantity varlance 750 F Overhead variance Labor price variance 710 U 490 U In addition, 8,000 units of product were sold at $8 per unit. Each unit sold had a standard cost of $3. Selling and administrative expenses were $8,470 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 For the month ended January 31, 2017 Sales 8000*8          64,000 Standard variable cost 8000*3          24,000 Standard gross profit          40,000 Variances Material Price variances      (1,370) Material Quantity variances            750 Laabor Price Variance          (490) Laabor Quantity Variance          (920) Overhead Variance          (710) Total Variances Unfavourable          (2,740) Actual Gross Profit          37,260 Selling and administrative expense          (8,470) Net Income          28,790