Question

Dvorak Company produces a product that requires 5 standard pounds per unit. The standard price is $2.50 per pound. The company produced 1,000 units that required 4,500 pounds, which were purchased at $3.00 per pound. The product also requires 3 standard hours per unit at a standard hourly rate of $17 per hour. If 1,000 units produced required 2,800 hours at an hourly rate of $16.50 per hour. In addition, the standard variable overhead cost per unit is $1.40 per hour and the actual variable factory overhead was $4,000. Finally, the standard fixed overhead cost per unit is $0.60 per hour at 3,500 hours, which is 100% of normal capacity.

Prepare a income statement through gross profit for Dvorak Company for the month ended July 31. Assume Dvorak sold 1,000 units at $90 per unit. Enter all amounts as positive numbers. If an amount box does not require an entry, leave it blank or enter "0".

Dvorak Company
Income Statement Through Gross Profit
For the Month Ended July 31
Sales			$
Cost of goods sold-at standard
Gross profit-at standard			$
	Unfavorable	Favorable
Less variances from standard cost:
Direct materials price	$	$
Direct materials quantity
Direct labor rate
Direct labor time
Factory overhead controllable
Factory overhead volume
Net variances from standard cost—favorable
Gross profit			$

Answer 1

Dvorak Company

Income Statement Through Gross Profit

For the Month Ended July 31 Sales (1000*90) 90000 Cost of goods sold (1000*5*2.50)+(1000*3*17)+(1000*3*(1.40+0.60)) 69500 Gross profit 20500 Favorable Unfavorable Less variances from standard cost Direct materials price (4500*(3-2.50)) 2250 Direct materials quantity (2.50*(4500-5000)) 1250 Direct labor rate (2800*(16.50-17)) 1400 Direct labor time (17*(2800-3000)) 3400 Factory overhead controllable (4000-(1.40*(1000*3))) 200 Factory overhead volume (0.6*(3500-(1000*3))) 300 3700 Gross profit (20500+3700) 24200