Income Statement with Variances Dvorak Company produces a product that requires
ID: 2568583 • 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
Correct 5
Cost of goods sold-at standard
Correct 7
Gross profit-at standard
Correct 9
Favorable
Unfavorable
Less variances from standard cost:
Direct materials price
Correct 14
Correct 15
Direct materials quantity
Correct 17
Correct 18
Direct labor rate
Correct 20
Correct 21
Direct labor time
Correct 23
Correct 24
Factory overhead controllable
Correct 26
Correct 27
Factory overhead volume
Correct 29
Correct 30
Correct 31
Gross profit
Correct 33
HideDvorak Company
Income Statement Through Gross Profit
For the Year Ended December 31, 2014
Sales
$Correct 5
Cost of goods sold-at standard
Correct 7
Gross profit-at standard
$Correct 9
Favorable
Unfavorable
Less variances from standard cost:
Direct materials price
$Correct 14
$Correct 15
Direct materials quantity
Correct 17
Correct 18
Direct labor rate
Correct 20
Correct 21
Direct labor time
Correct 23
Correct 24
Factory overhead controllable
Correct 26
Correct 27
Factory overhead volume
Correct 29
Correct 30
Correct 31
Gross profit
$Correct 33
Explanation / Answer
Dvorak Company Income Statement Through Gross Profit For the Year Ended December 31, 2014 Sales 90000 Cost of goods sold-at standard (1000*((5*2.5)+(3*17)+(1.4*3))+(.6*3500) 69800 Gross profit-at standard 20200 Favorable Unfavorable Less variances from standard cost: Direct materials price (4500*3)-(4500*2.5) 2250 Direct materials quantity 2.5*(4500-(1000*5) 1250 Direct labor rate (2800*16.5)-(2800*17) 1400 Direct labor time 17*(2800-(1000*3) 3400 Factory overhead controllable 4000-(1.4*1000*3) 200 Factory overhead volume (2800*.6)-(3500*.6) 420 4420 Gross profit 24620