Alpine Productions uses a standard cost system for recording transactions. Alpin

Question

Alpine Productions uses a standard cost system for recording transactions. Alpine reported the following data for the year ended December 31 Sales revenues: $500,000 Cost of goods sold (standard costing): S382,000 Selling & admin expenses: $105,000 Variances Sales revenue variance Direct materials cost variance Direct materials efficiency variance Direct labor cost variance Direct labor efficiency variance Variable overhead cost variance S4,200 F 40 U 300 F 70 U 20 F 300 U OA. $16,885 OB. $121,885 O C. $13,000 CD. $12,685

Explanation / Answer

SOLUTION

1. Net Operating income = $16,885

Amount ($) Amount ($) Amount ($) Sales revenue (standard) 500,000 Sales revenue variance 4,200 Sales revenue (actual) 504,200 Cost of goods sold (standard) 382,000 Manufacturing variances Direct materials cost variance 40 Direct materials efficiency variance (300) Direct labor cost variance 70 Direct labor efficiency variance (20) Variable overhead cost variance 300 Variable overhead efficiency variance (75) Fixed overhead cost variance 430 Fixed overhead volume variance (130) 315 Cost of goods sold (actual) 382,315 Gross profit 121,885 Selling and admin. expenses 105,000 Net operating income 16,885

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