Answer:
GIOVANNI COMPANY
Income Statement Through Gross Profit
For the Year Ended December 31, 2014
Sales (3,500 units × $400) $1,400,000
Cost of goods sold—at standard* 1,093,750
Gross profit—at standard $ 306,250
F
avorable Unfavorable
Less variances from standard cost:
Direct materials price (PE23–1A) $10,800
Direct materials quantity (PE23–1A) $13,600
Direct labor rate (PE23–2A) 8,850
Direct labor time (PE23–2A) 6,000
Factory overhead controllable (PE23–3A) 2,150
Factory overhead volume (PE23–4A) 900 (18,900)
Gross profit $ 287,350
* Direct materials (3,500 units × 4 gal. × $34.00)……………………………………………………
$ 476,000
Direct labor (3,500 units × 5 hrs. × $30.00)……………………………………………………… 525,000
Factory overhead [3,500 units × 5 hrs. × ($3.50 + $1.80)]……………………………………… 92,750
Cost of goods sold at standard……………………………………………………………………… $1,093,750
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