24E McCarthy Fender, which uses a st... [FREE SOLUTION]

Chapter 23: 24E (page 1265)

McCarthy Fender, which uses a standard cost system, manufactured 20,000 boat fenders during 2018. The 2018 revenue and cost information for McCarthy follows:
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
Assume each fender produced was sold for the standard price of $65, and total selling and administrative costs were $250,000. Prepare a standard cost income statement for 2018 for McCarthy Fender

Expert verified

The standard cost income statement is prepared with an operating income of $847,480.

The sales revenue is defined as the amount of cash gained by the firm for the goods sold.

McDonald Outfitter Inc
Standard Cost Income Statement
For the month ended May 31, 2018
	Amount ($)	Amount ($)	Amount ($)
Sales Revenue (At standard)			1,300,000
Cost of goods sold (At standard)		196,800
Manufacturing Variance:
Direct Material Cost Variance	-7,150
Direct material Efficiency Variance	5,950
Direct Labor cost Variance	400
Direct Labor Efficiency Variance	-530
Variable Overhead Cost Variance	650
Variable Overhead Efficiency Variance	-360
Fixed Overhead Cost Variance	2,350
Fixed Overhead Volume Variance	4,410
Total Manufacturing Variances		5,720
Cost of goods sold (At Actual)			202,520
Gross Profit			1,097,480
Less: Selling and Administrative expenses			-250,000
Operating Income			847,480