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 1,370 U Labor quantity varlance $920 U Materials quantity variance 750 F Overhead variance Labor price varlance 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

Income Statement :

Sales			64000
Cost of goods sold (at standard)			24000
Gross profit (at standard)			40000
Variances
Material price variance	1370	Unfavourable
Material quantity variance	750	Favourable
Labour price variance	490	Unfavourable
Labour quantity variance	920	Unfavourable
Overhead variance	710	Unfavourable
Total variance unfavourable			2740
Gross profit (Actual)			37260
Less: Selling and administrative exp			8470
Net Income			28790