Exercise 25-16 Fisk Company uses a standard cost accounting system. During Janua

Question

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

Explanation / Answer

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

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