Question

Pepper Industries uses a standard cost accounting system. During March, 2019, the company reported the following manufacturing variances:

Materials price variance		$1,600	F
Materials quantity variance		2,400	U
Labor price variance		600	U
Labor quantity variance		2,200	U
Overhead controllable		500	F
Overhead volume		3,000	U

In addition, 15,000 units of product were sold at $18 per unit. Each unit sold had a standard cost of $14. Selling and administrative expenses for the month were $15,000.

Prepare an income statement for management for the month ending March 31, 2019. (Enter favorable variance using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)

PEPPER INDUSTRIES Income Statement For the Month Ended March 31, 2019
Cost of Goods SoldNet Income / (Loss)Materials QuantityGross profit (actual)SalesVariancesGross Profit (at standard)Total VariancesSelling and Administrative Expenses				$
Selling and Administrative ExpensesMaterials QuantityTotal VariancesGross profit (actual)Cost of Goods SoldVariancesGross Profit (at standard)SalesNet Income / (Loss)
Materials QuantityTotal VariancesGross profit (actual)VariancesGross Profit (at standard)SalesNet Income / (Loss)Cost of Goods SoldSelling and Administrative Expenses
Labor PriceTotal VariancesLabor QuantityMaterials PriceOverhead ControllableOverhead VolumeVariancesMaterials Quantity
Labor QuantityMaterials PriceTotal VariancesOverhead ControllableLabor PriceVariancesMaterials QuantityOverhead Volume		$
Total VariancesVariancesMaterials QuantityLabor PriceLabor QuantityOverhead ControllableOverhead VolumeMaterials Price
Labor PriceMaterials QuantityLabor QuantityTotal VariancesMaterials PriceVariancesOverhead VolumeOverhead Controllable
Materials PriceOverhead ControllableLabor PriceLabor QuantityTotal VariancesOverhead VolumeVariancesMaterials Quantity
VariancesMaterials PriceLabor PriceOverhead VolumeMaterials QuantityTotal VariancesOverhead ControllableLabor Quantity
Total VariancesOverhead ControllableMaterials PriceVariancesLabor QuantityMaterials QuantityOverhead VolumeLabor Price
Overhead ControllableMaterials QuantityMaterials PriceLabor PriceTotal VariancesVariancesOverhead VolumeLabor Quantity
Total VariancesVariancesNet Income / (Loss)Gross profit (actual)Materials QuantityGross Profit (at standard)Selling and Administrative ExpensesSalesCost of Goods Sold
Materials QuantityTotal VariancesNet Income / (Loss)SalesGross profit (actual)Cost of Goods SoldGross Profit (at standard)Selling and Administrative ExpensesVariances
Materials QuantitySalesNet Income / (Loss)Selling and Administrative ExpensesGross profit (actual)VariancesGross Profit (at standard)Total VariancesCost of Goods Sold				$

Answer 1

Pepper Industries
Income Statement
Sales		$270,000.00
Less: Cost Of Goods Sold (15000*14)		$210,000.00
Gross Profit (Standard)		$60,000.00
Adjustement : Variance
Materials Price Variance	-$1,600.00
Materials Quantity Variance	$2,400.00
Labor Price Variance	$600.00
Labor Quantity Variance	$2,200.00
Overhead Controllable Variance	-$500.00
Overhead Volume Variance	$3,000.00	$6,100.00
Gross Profit (Actual)		$53,900.00
Less: Selling And Administrative Expenses		$15,000.00
Net Income		$38,900.00