Prepare a 2014 income statement through gross profit for Dvorak Company, using the variance data

Prepare a 2014 income statement through gross profit for Dvorak Company, using the variance data in Practice Exercises 23-1B, 23-2B, 23-3B, and 23-4B. Assume Dvorak sold 1,000 units at $90 per unit.

Answer:


DVORAK COMPANY 
Income Statement Through Gross Profit 
For the Year Ended December 31, 2014 
Sales (1,000 units × $90) $90,000 
Cost of goods sold—at standard* 69,500 
Gross profit—at standard $20,500 
    F
avorable Unfavorable  
Less variances from standard cost:    
Direct materials price (PE23–1B)  $2,250  
Direct materials quantity (PE23–1B) $1,250   
Direct labor rate (PE23–2B) 1,400   
Direct labor time (PE23–2B) 3,400   
Factory overhead controllable (PE23–3B) 200   
Factory overhead volume (PE23–4B)  300 3,700 
Gross profit   $24,200 
    
* Direct materials (1,000 units × 5 lbs. × $2.50)…………………………………………………… 

$12,500 
Direct labor (1,000 units × 3 hrs. × $17.00)……………………………………………………… 51,000 
Factory overhead [1,000 units × 3 hrs. × ($1.40 + $0.60)]………………………………………     6,000 
Cost of goods sold at standard…………………………………………………………………… $69,500