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In: Accounting

Fisk Company uses a standard cost accounting system. During January, the company reported the following manufacturing...

Fisk Company uses a standard cost accounting system. During January, the company reported the following manufacturing variances.

Materials price variance $1,290 U Labor quantity variance $910 U
Materials quantity variance 730 F Overhead variance 830 U
Labor price variance 440 U


In addition, 8,490 units of product were sold at $9 per unit. Each unit sold had a standard cost of $5. Selling and administrative expenses were $7,580 for the month.

Prepare an income statement for management for the month ended January 31, 2020.

FISK COMPANY
Income Statement
                                                          For the Year Ended January 31, 2020January 31, 2020For the Month Ended January 31, 2020

$

                                                          DividendsExpensesGross Profit (Actual)Gross Profit (at Standard)Net Income / (Loss)RevenuesTotal ExpensesTotal RevenuesTotal VarianceVariances

                                                          DividendsExpensesGross Profit (Actual)Gross Profit (at Standard)Net Income / (Loss)RevenuesTotal ExpensesTotal RevenuesTotal VarianceVariances

$

                                                          FavorableUnfavorableNeither favorable nor unfavorable

                                                          FavorableUnfavorableNeither favorable nor unfavorable

                                                          FavorableUnfavorableNeither favorable nor unfavorable

                                                          FavorableUnfavorableNeither favorable nor unfavorable

                                                          FavorableUnfavorableNeither favorable nor unfavorable

                                                          DividendsExpensesGross Profit (Actual)Gross Profit (at Standard)Net Income / (Loss)RevenuesTotal ExpensesTotal RevenuesTotal VarianceVariances

                                                          FavorableUnfavorableNeither favorable nor unfavorable

                                                          DividendsExpensesGross Profit (Actual)Gross Profit (at Standard)Net Income / (Loss)RevenuesTotal ExpensesTotal RevenuesTotal VarianceVariances

                                                          DividendsExpensesGross Profit (Actual)Gross Profit (at Standard)Net Income / (Loss)RevenuesTotal ExpensesTotal RevenuesTotal VarianceVariances

$

Solutions

Expert Solution

Answer:

FISK COMPANY   
Income Statement   
For the Month Ended January 31, 2020   
Sales Revenue          76,410
Cost of goods sold          42,450
Gross Profit (at Standard)          33,960
Variances
Material Price          1,290 Unfavorable
Material Quantity             730 Favorable
Labor Price             440 Unfavorable
Labor Quantity             910 Unfavorable
Overhead             830 Unfavorable
Total Variance            2,740
Gross Profit (Actual)          31,220
Selling and administrative expenses            7,580
Net Income/(Loss)          23,640

Calculation:

To prepare the income statement for the month January 31, 2020, first we need to calculate the sales revenue.

Sales Revenue = 8,490 x 9 = 76,410

Then, we need to calculate the Cost of goods sold = 8,490 x 5 = 42,450

Then, we need to deduct the cost of goods sold from sales to get the gross profit.

Next step, we need to input the varainces and the favorable/unfavorable critera. Then, we need to calculate the total variance.

Total Variance = 1,290 + 440 + 910 + 830 -  730 = 2,740

Next step is to calculate the Gross Profit (Actual), for that we need to deduct the total variance from the gross profit. Then also we need to deduct the Selling and administrative expenses from the Gross Profit (Actual), to get the Net Income/(Loss).

ekkarill92 answered 1 year ago
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