Chapter 10.B, Problem 2E

To determine

Here, in the given problem we are supposed to find out the effect of standard cost variances on cost of goods sold for Swain Company. Further, an income statement is required and also reporting closing balance of the Retained Earnings is required.

Introduction:

Standard costing is a cost accounting technique used by various organizations to identify the variances between the actual cost incurred and the cost that should have been incurred. Here, the organization sets predetermined estimates and then compare them with the actual amounts to determine the variances.

To determine

Now, we are required to prepare the income statement for Swain for the year.

To determine

Now, we are required to ascertain Swain’s ending balance of retained earnings for the year.