Administrative expenses $100,800
Cost of goods sold (at standard) 550,000
Direct materials price variance—unfavorable 1,680
Direct materials quantity variance—favorable 560
Direct labor rate variance—favorable 1,120
Direct labor time variance—unfavorable 490
Variable factory overhead controllable variance—favorable 210
Fixed factory overhead volume variance—unfavorable 3,080
Interest expense 2,940
Sales 868,000
Selling expenses 125,000
Prepare an income statement for presentation to management.
Answer:
GRIGGS COMPANY
Income Statement
For the Month Ended December 31, 2014
Sales $868,000
Cost of goods sold—at standard 550,000
Gross profit—at standard $318,000
F
avorable Unfavorable
Less variances from standard cost:
Direct materials price $ — $ 1,680
Direct materials quantity 560 —
Direct labor rate 1,120 —
Direct labor time — 490
Variable factory overhead controllable 210 —
Fixed factory overhead volume — 3,080 3,360
Gross profit $314,640
Operating expenses:
Selling expenses $125,000
Administrative expenses 100,800 225,800
Income from operations $ 88,840
Other expense:
Interest expense 2,940
Income before income tax $ 85,900