Question

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. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. If an amount box does not require an entry leave it blank.

Griggs Company
Income Statement
For the Month Ended December 31
			$fill in the blank 2
			fill in the blank 4
			$fill in the blank 6
	Unfavorable	Favorable
Variances from standard cost:
	$fill in the blank 8	$fill in the blank 9
	fill in the blank 11	fill in the blank 12
	fill in the blank 14	fill in the blank 15
	fill in the blank 17	fill in the blank 18
	fill in the blank 20	fill in the blank 21
	fill in the blank 23	fill in the blank 24
			fill in the blank 26
			$fill in the blank 28
Operating expenses:
	$fill in the blank 30
	fill in the blank 32
Total operating expenses			fill in the blank 33
			$fill in the blank 35
Other expense:
			fill in the blank 37
			$fill in the blank 39

Answer 1

Griggs Company
Income Statement
For the Month Ended December 31
Sales			868000
Cost of goods sold at standard			550000
Gross profit at standard			318000
	Unfavorable	Favorable
Variances from standard cost:
Direct materials price variance	1680
Direct materials quantity variance		-560
Direct labor rate variance		-1120
Direct labor time variance	490
Variable factory overhead controllable variance		-210
Fixed factory overhead volume variance	3080
Total variances from standard cost			3360
Gross profit at actual			314640
Operating expenses:
Selling expenses	125000
Administrative expenses	100800
Total operating expenses			225800
Operating income (loss)			88840
Other expense:
Interest expense			2940
Income before income tax			85900

Note: Unfavorable variances are deducted while favorable variances are added to the gross profit at standard, to arrive at the actual gross profit.