Question

Tropic Zone Corporation experienced the following variances: materials price $410 U, materials quantity $2,010 F, labor price $940 F, labor quantity $590 F, and total overhead $1,420 U. Sales revenue was $108,700, and cost of goods sold (at standard) was $60,900.

Determine the actual gross profit.

Actual Gross Profit: $________

Answer 1

Ans.	TROPIC ZONE CORPORATION
	Income Statement
	Sales revenue		$108,700
	Less: Cost of goods sold (at standard)		-$60,900
	Gross profit (at standard)		$47,800
	Variances :
	Materials price	-$410
	Materials quantity	$2,010
	Labor price	$940
	Labor quantity	$590
	Total overhead	-$1,420
	Total variance - Favorable		$1,710
	Actual Gross profit		$46,090
	*Actual gross profit = Standard gross profit - Total favorable variance
	$47,800 - $1,710
	$46,090