Income Statement with Variances Alvarado Company produces a product that requires 3.0 standard pounds per unit at a standard price of $6.00 per pound. The company used 23,900 pounds to produce 8,000 units, which were purchased at $6.20 per pound. Each unit requires 7.5 standard direct labor hours per unit at a standard hourly rate of $22.50 per hour. For the 8,000 units produced, 60,200 hours were needed and employees were paid an hourly rate of $21.95 per hour. The company uses a standard variable overhead cost per unit of $1.45 per direct labor hour. Actual variable factory overhead was $85,900. The company uses a standard fixed overhead cost per unit of $2.00 per direct labor hour at 55,000 hours, which is 100% of normal capacity. Prepare an income statement through gross profit for Alvarado Company for the month ended March 31. Assume Alvarado sold 8,000 units at $250 per unit. For those boxes in which you must enter subtractive or negative numbers use a minus sign. If an amount box does not require an entry, leave it blank. Alvarado CompanyIncome Statement Through Gross ProfitFor the Month Ended March 31 Line Item Description Amount Unfavorable Amount Favorable Amount Sales $Sales Cost of goods sold-at standard Cost of goods sold-at standard Gross profit-at standard $Gross profit-at standard Variances from standard cost: Direct materials price $Direct materials price $Direct materials price Direct materials quantity Direct materials quantity Direct materials quantity Direct labor rate Direct labor rate Direct labor rate Direct labor time Direct labor time Direct labor time Factory overhead controllable Factory overhead controllable Factory overhead controllable Factory overhead volume Factory overhead volume Factory overhead volume Net variances from standard cost-favorable Net variances from standard cost-favorable Gross profit $Gross profit

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Income Statement with Variances

Alvarado Company produces a product that requires 3.0 standard pounds per unit at a standard price of $6.00 per pound. The company used 23,900 pounds to produce 8,000 units, which were purchased at $6.20 per pound. Each unit requires 7.5 standard direct labor hours per unit at a standard hourly rate of $22.50 per hour. For the 8,000 units produced, 60,200 hours were needed and employees were paid an hourly rate of $21.95 per hour. The company uses a standard variable overhead cost per unit of $1.45 per direct labor hour. Actual variable factory overhead was $85,900. The company uses a standard fixed overhead cost per unit of $2.00 per direct labor hour at 55,000 hours, which is 100% of normal capacity.

Prepare an income statement through gross profit for Alvarado Company for the month ended March 31. Assume Alvarado sold 8,000 units at $250 per unit. For those boxes in which you must enter subtractive or negative numbers use a minus sign. If an amount box does not require an entry, leave it blank.

Alvarado CompanyIncome Statement Through Gross ProfitFor the Month Ended March 31

Line Item Description	Amount Unfavorable	Amount Favorable	Amount
Sales			$Sales
Cost of goods sold-at standard			Cost of goods sold-at standard
Gross profit-at standard			$Gross profit-at standard
Variances from standard cost:
Direct materials price	$Direct materials price	$Direct materials price
Direct materials quantity	Direct materials quantity	Direct materials quantity
Direct labor rate	Direct labor rate	Direct labor rate
Direct labor time	Direct labor time	Direct labor time
Factory overhead controllable	Factory overhead controllable	Factory overhead controllable
Factory overhead volume	Factory overhead volume	Factory overhead volume
Net variances from standard cost-favorable			Net variances from standard cost-favorable
Gross profit			$Gross profit

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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