Preparing a standard cost income StatementMcCarthy Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018. The 2018 revenue and cost information for McCarthy follows:Assume each fender produced was sold for the standard price of $365, and total selling and administrative costs were $250,000. Prepare a standard cost income statement for 2018 for McCarthy Fender. Sales Revenue$ 1,300,000Cost of Goods Sold (at standard)196,800Direct materials cost variance7,150 FDirect materials efficiency variance5,950 UDirect labor cost variance400 UDirect labor efficiency variance530 FVariable overhead cost variance650 UVariable overhead efficiency variance360 FFixed overhead cost variance2,350 UFixed overhead volume variance4,410 U

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Answered: Sales Revenue $ 1,300,000 Cost of Goods…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Preparing a standard cost income Statement

McCarthy Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018. The 2018 revenue and cost information for McCarthy follows:

Assume each fender produced was sold for the standard price of $365, and total selling and administrative costs were $250,000. Prepare a standard cost income statement for 2018 for McCarthy Fender.

Sales Revenue
$ 1,300,000
Cost of Goods Sold (at standard)
196,800
Direct materials cost variance
7,150 F
Direct materials efficiency variance
5,950 U
Direct labor cost variance
400 U
Direct labor efficiency variance
530 F
Variable overhead cost variance
650 U
Variable overhead efficiency variance
360 F
Fixed overhead cost variance
2,350 U
Fixed overhead volume variance
4,410 U

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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