Lily Company uses a standard cost accounting system. During January, the company reported the following manufacturing variances Materials price variance Materials quantity variance Labor price variance $1,270 U 710 F 550 U Labor quantity variance Overhead variance $780 U 890 U In addition, 8,760 units of product were sold at $9 per unit. Each unit sold had a standard cost of $3. Selling and administrative expenses were $8,400 for the month. Prepare an income statement for management for the month ended January 31, 2022. LILY COMPANY Income Statement For the Month Ended January 31, 2022
Lily Company uses a standard cost accounting system. During January, the company reported the following manufacturing variances Materials price variance Materials quantity variance Labor price variance $1,270 U 710 F 550 U Labor quantity variance Overhead variance $780 U 890 U In addition, 8,760 units of product were sold at $9 per unit. Each unit sold had a standard cost of $3. Selling and administrative expenses were $8,400 for the month. Prepare an income statement for management for the month ended January 31, 2022. LILY COMPANY Income Statement For the Month Ended January 31, 2022
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:Lily Company uses a standard cost accounting system. During January, the company reported the following manufacturing variances.
Materials price variance
Materials quantity variance
Labor price variance
$1,270 U
710 F
550 U
Labor quantity variance
Overhead variance
$780 U
890 U
In addition, 8,760 units of product were sold at $9 per unit. Each unit sold had a standard cost of $3. Selling and administrative
expenses were $8,400 for the month
Prepare an income statement for management for the month ended January 31, 2022.
LILY COMPANY
Income Statement
For the Month Ended January 31, 2022
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