Forsyth Company manufactures one product, it does not maintain any beginning or
ID: 2525575 • Letter: F
Question
Forsyth Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost system. During the year, the company produced and sold 10,000 units at a price of $154 per unit. Its standard cost per unit produced is $124 and its selling and administrative expenses totaled $244,500. Forsyth does not have any variable manufacturing overhead costs and it recorded the following variances during the year:
Required:
1. When Forsyth closes its standard cost variances, the cost of goods sold will increase (decrease) by how much?
2. Prepare an income statement for the year.
Materials price variance $ 8,400 F Materials quantity variance $ 12,100 U Labor rate variance $ 5,400 U Labor efficiency variance $ 6,300 F Fixed overhead budget variance $ 4,400 F Fixed overhead volume variance $ 13,900 FExplanation / Answer
Total overhead variance ;
Cost of goods sold will decrease by 15500.
2) Prepare an income statement for the year.
Materials price variance 8400 F Materials quantity variance 12100 U Labor rate variance 5400 U Labor efficiency variance 6300 F Fixed overhead budget variance 4400 F Fixed overhead volume variance 13900 F Total overhead variance 15500 F