Question

Please help with managerial accounting

mework Forsyth Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost system. During the year, the company produced and sold 10,000 units at a price of $146 per unit its standard cost per unit produced is $116 and its selling and administrative expenses totaled $240,500. Forsyth does not have any variable manufacturing overhead costs and it recorded the following variances during the year Materials price variance Materiale quantity variance 7.600 011,300 6,600 Labor oftleiese variance Fixed overhead b ut wariace Twee vara $ 3.600 13.100 Required: 1. When Forsyth closes its standard cost variances, the cost of goods sold will increase decrease by how much 2. Prepare an income statement for the year Complete this question by entering your answers in the tabs below When Forsyth coses its standard covariances, the cost of

Answer 1

1	The cost of goods sold will decrease by $13,900

Working:

Materials price variance	7,600	F
Materials quantity variance	-11,300	U
Labor rate variance	-4,600	U
Labor efficiency variance	5,500	F
Fixed overhead budget variance	3,600	F
Fixed overhead volume variance	13,100	F
Net of variances	13,900	F

2.

Income Statement
Sales		$1,460,000.00	=10000*146
Cost of goods sold at standard	$ 1,160,000.00		=(10000*116)
Less: Total Variance Adjustment	$ 13,900.00	$1,146,100.00
Gross Profit		$   313,900.00
Less: Selling and administrative expenses		$   240,500.00
Gross Profit		$     73,400.00