Question

Concord Corporation accumulates the following data relative to jobs started and finished during the month of June 2020.

Costs and Production Data		Actual		Standard
Raw materials unit cost		$2.40		$2.20
Raw materials units		11,000		10,300
Direct labor payroll		$162,800		$159,600
Direct labor hours		14,800		15,200
Manufacturing overhead incurred		$217,464
Manufacturing overhead applied				$221,464
Machine hours expected to be used at normal capacity				41,500
Budgeted fixed overhead for June				$66,400
Variable overhead rate per machine hour				$3.10
Fixed overhead rate per machine hour				$1.60

Overhead is applied on the basis of standard machine hours. 3.10 hours of machine time are required for each direct labor hour. The jobs were sold for $478,000. Selling and administrative expenses were $37,900. Assume that the amount of raw materials purchased equaled the amount used.

prepare an income statement for management. (Ignore income taxes

CONCORD CORPORATION Income Statement For the Month Ended June 30, 2020 Sales Revenue 478000 Cost of Goods Sold 403724 Gross Profit (at Standard) T 74276 Variances Materials Price Variance s Price variance erials Quantity Variance ; U Materials Quantity Variance Labor Price Variance U 22007 Unfavorable 154017 unfavorable 740014 Unfavorable .4200favorable -4000)favorable Unfavorable Labor Quantity Variance ance Overhead Variance L Total Variance Unfavorable 2940 Gross Profit (Actual) T 77216 Selling and Administrative Expenses 37900 Net Income / (Loss) 39316

Answer 1

The gross profit actual will be

= gross profit at standard - total variance unfavorable

= 74276 - 2940

= $ 71336

Net profit = gross profit actual- selling and administrative expenses

=71336 - 37900

= $ 33436