In Oriole Company’s income statement, they report gross profit of $46000 at standard and the following...
In Oriole Company’s income statement, they report gross profit
of $46000 at standard and the following variances:
| Materials price | $ 420 F |
| Materials quantity | 600 F |
| Labor price | 420 U |
| Labor quantity | 1000 F |
| Overhead | 900 F |
Oriole would report actual gross profit of:
A. $48500.
B. $49340.
C. $42660.
D. $43500.
Homework Answers
Answer:
Given:
Gross profit at standard=$ 46,000
Favorable cost variance are=Material price+material quantity+labor quantity+overhead
=$ 420+$ 600+$ 1,000+$900
=$ 2,920
Unfavorable cost variance= labor price
=$ 420
Oriole Company’s actual gross profit is calculation as following:
Actual gross profit=Gross profit at standard+Favorable cost variance -unfavorable cost variance
=$ 46,000 + $ 2,920 - $ 420
=$ 48,920 - $ 420
=$ 48,500.
Therefore option A is correct.
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