Income Statement with Variances Dvorak Company produces a product that requires 5 standard pounds per unit. The standard price is $2.50 per pound. The company produced 1,000 units that required 4,500 pounds, which were purchased at $3.00 per pound. The product also requires 3 standard hours per unit at a standard hourly rate of $17 per hour. The 1,000 units produced required 2,800 hours at an hourly rate of $16.50 per hour. In addition, the standard variable overhead cost per unit is $1.40 per hour and the actual variable factory overhead was $4,000. Finally, the standard fixed overhead cost per unit is $0.60 per hour at 3,500 hours, which is 100% of normal capacity. Prepare an income statement through gross profit for Dvorak Company for the month ended July 31. Assume that Dvorak sold 1,000 units at $90 per unit. If an amount box does not require an entry, leave it blank or enter "0". Dvorak Company Income Statement Through Gross Profit For the Month Ended July 31 Sales $fill in the blank 1 Cost of goods sold-at standard fill in the blank 2 Gross profit-at standard $fill in the blank 3 Unfavorable Favorable Plus variance adjustments to gross profit-at standard: Direct materials price $fill in the blank 4 $fill in the blank 5 Direct materials quantity fill in the blank 6 fill in the blank 7 Direct labor rate fill in the blank 8 fill in the blank 9 Direct labor time fill in the blank 10 fill in the blank 11 Factory overhead controllable fill in the blank 12 fill in the blank 13 Factory overhead volume fill in the blank 14 fill in the blank 15 Net variance from standard cost—favorable fill in the blank 16 Gross profit-actual $fill in the blank 17
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Income Statement with Variances
Dvorak Company produces a product that requires 5 standard pounds per unit. The standard price is $2.50 per pound. The company produced 1,000 units that required 4,500 pounds, which were purchased at $3.00 per pound. The product also requires 3 standard hours per unit at a standard hourly rate of $17 per hour. The 1,000 units produced required 2,800 hours at an hourly rate of $16.50 per hour. In addition, the standard variable overhead cost per unit is $1.40 per hour and the actual variable factory overhead was $4,000. Finally, the standard fixed overhead cost per unit is $0.60 per hour at 3,500 hours, which is 100% of normal capacity.
Prepare an income statement through gross profit for Dvorak Company for the month ended July 31. Assume that Dvorak sold 1,000 units at $90 per unit. If an amount box does not require an entry, leave it blank or enter "0".
| Dvorak Company | |||
| Income Statement Through Gross Profit | |||
| For the Month Ended July 31 | |||
| Sales | $fill in the blank 1 | ||
| Cost of goods sold-at standard | fill in the blank 2 | ||
| Gross profit-at standard | $fill in the blank 3 | ||
| Unfavorable | Favorable | ||
| Plus variance adjustments to gross profit-at standard: | |||
| Direct materials price | $fill in the blank 4 | $fill in the blank 5 | |
| Direct materials quantity | fill in the blank 6 | fill in the blank 7 | |
| Direct labor rate | fill in the blank 8 | fill in the blank 9 | |
| Direct labor time | fill in the blank 10 | fill in the blank 11 | |
| Factory overhead controllable | fill in the blank 12 | fill in the blank 13 | |
| Factory overhead volume | fill in the blank 14 | fill in the blank 15 | |
| Net variance from |
fill in the blank 16 | ||
| Gross profit-actual | $fill in the blank 17 |
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