Income Statement with Variances Dvorak Company produces a product that requires
ID: 2566841 • Letter: I
Question
Income Statement with Variances
Dvorak Company produces a product that requires five standard pounds per unit. The standard price is $2.50 per pound. Assume the company produced 1,000 units of product. 1,000 units required 4,500 pounds, which were purchased at $3.00 per pound. The product requires three standard hours per unit at a standard hourly rate of $17 per hour. The 1,000 units required 2,800 hours at an hourly rate of $16.50 per hour. The standard variable overhead cost per unit is $1.40 per hour. The actual variable factory overhead was $4,000. The standard fixed overhead cost per unit is $0.60 per hour at 3,500 hours, which is 100% of normal capacity.
Prepare a 2014 income statement through gross profit for Dvorak Company. Assume Dvorak sold 1,000 units at $90 per unit. Enter all amounts as positive numbers. If an amount does not require an entry or is zero, enter "0".
Dvorak Company
Income Statement Through Gross Profit
For the Year Ended December 31, 2014
Sales
$
Cost of goods sold-at standard
Gross profit-at standard
$
Favorable
Unfavorable
Less variances from standard cost:
Direct materials price
$
$
Direct materials quantity
Direct labor rate
Direct labor time
Factory overhead controllable
Factory overhead volume
Gross profit
$
HideDvorak Company
Income Statement Through Gross Profit
For the Year Ended December 31, 2014
Sales
$
Cost of goods sold-at standard
Gross profit-at standard
$
Favorable
Unfavorable
Less variances from standard cost:
Direct materials price
$
$
Direct materials quantity
Direct labor rate
Direct labor time
Factory overhead controllable
Factory overhead volume
Gross profit
$
Explanation / Answer
sales (1000 * 90) $ 90000 cost of goods sold at standard [(5000*2.5)+(3000*17)+(1.4*3000)+(3500*0.6)] 69800 Gross profit-at standard 20200 favourable unfavourable Less variances from standard cost: direct material price ( 2.5 - 3)* 4500 2250 direct material quantity (5000-4500)2.5 1250 direct labour time (3000-2800)17 3400 direct labour rate (17-16.5) 2800 1400 Factory overhead controllable (1.4*3000) - 4000 200 Factory overhead volume (3500 - 3000)*0.6 300 4300 GROSS PROFIT $24500