Prepare an income statement that includes variances for the 2020 calendar year end for Bright Light using
Question:
Prepare an income statement that includes variances for the 2020 calendar year end for Bright Light using the information shown and the direct labor variances calculated in Exercise 10. The company sold all goods produced during the period at a selling price of $75 each. Standard costs per unit: Direct material $ 10.00 Fixed factory overhead 6.50 Variable factory overhead 4.50 Direct labor 9.00 Total $ 30.00 Variances: Direct materials price $(1,900) Direct materials quantity $2,750
Factory overhead controllable $6,700 Factory overhead volume $(2,100) Selling expenses $23,500 Administrative expenses $27,900
EXERCISE 10:
Rider Inc.
2
Factory Overhead Cost Variance Report
3
For the Month Ending June 30
4
Productive capacity for the month (100% of normal) 5,000 hours
5
Actual production for the month 4,000 hours
6
7
Budget (at Actual Production)
8
Variances
9
Actual
Favorable
Unfavorable
10
Variable factory overhead costs:
11
Indirect factory wages
$ 8,000
$ 5,100
$(2,900)
12
Power and light
4,000
4,200
$ 200
13
Indirect materials
2,400
1,100
(1,300)
14
Total variable factory
15
overhead cost
$14,400
$10,400
16
Fixed factory overhead costs:
17
Supervisory salaries
$ 5,500
$ 5,500
18
Depreciation of plant and
19
equipment
4,500
4,500
20
Insurance and property taxes
2,000
2,000
21
Total fixed factory
22
overhead cost
$12,000
$12,000
23
Total factory overhead cost
$26,400
$22,400
24
Total controllable variances
$(4,200)
$ 200
25
26
27
Net controllable variance—favorable [$(4,200) favorable + $200] unfavorable
$(4,000)
28
Volume variance—unfavorable:
29
Capacity not used at the standard rate for fixed
30
factory overhead—1,000 $2.40
2,400
31
Total factory overhead cost variance—favorable
$(1,600)
Financial Accounting
ISBN: 978-0324645576
10th edition
Authors: W. Steve Albrecht, James D. Stice, Earl K. Stice