Pages

Sunday, September 22, 2019

Prepare a 2014 income statement through gross profit for Giovanni Company, using the variance data in Practice

Prepare a 2014 income statement through gross profit for Giovanni Company, using the variance data in Practice Exercises 23-1A, 23-2A, 23-3A, and 23-4A. Assume Giovanni sold 3,500 units at $400 per unit.

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 

No comments:

Post a Comment