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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Income statement indicating standard cost variances

 The following data were taken from the records of Griggs Company for December:

Administrative expenses $100,800
Cost of goods sold (at standard) 550,000
Direct materials price variance—unfavorable 1,680
Direct materials quantity variance—favorable (560)
Direct labor rate variance—favorable (1,120)
Direct labor time variance—unfavorable 490
Variable factory overhead controllable variance—favorable (210)
Fixed factory overhead volume variance—unfavorable 3,080
Interest expense 2,940
Sales 868,000
Selling expenses 125,000

 Prepare an income statement for presentation to management.

To determine

Income statement with variances:

The net income or net loss for a particular time period arising from the financial statement which reports revenues, and expenses from business operations is referred to as income statement. In the income statement with variances, the balance of each variances account indicates the favorable and unfavorable variance at the end of the period.

To prepare: An income statement for presentation to management.

Explanation

Prepare an income statement for presentation to management.

Company G

Income Statement

For the month ended December 31
Sales $868,000
Cost of goods sold—at standard 550,000
Gross profit—at standard $318,000
  Favorable Unfavorable  
Less: Variances from standard cost:      
Direct materials price $— $1,680  
Direct materials quantity (560)  
Direct labor rate (1,120)  
Direct labor time 490  
Variable factory overhead controllable (210)  
Fixed factory overhead volume

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