Bascom Inc.manufactures one product.It does not maintain any beginning or ending inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.Its standard cost per unit produced is $25.75.During the year, the company produced and sold 36,000 units at a price of $31.80 per unit and its selling and administrative expenses totaled $169,000.The company does not have any variable manufacturing overhead costs.It recorded the following variances during the year:
Required:
1.When the company closes its standard cost variances, the cost of goods sold will increase (decrease)by how much?
2.Prepare an income statement for the year.

Question

Bascom Inc.manufactures one product.It does not maintain any beginning or ending inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.Its standard cost per unit produced is $25.75.During the year, the company produced and sold 36,000 units at a price of $31.80 per unit and its selling and administrative expenses totaled $169,000.The company does not have any variable manufacturing overhead costs.It recorded the following variances during the year:  
Required:
1.When the company closes its standard cost variances, the cost of goods sold will increase (decrease)by how much?
2.Prepare an income statement for the year.

Quizplus · Accepted Answer

The Answer of Bascom Inc.manufactures one product.It does not maintain any beginning or ending inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.Its standard cost per unit produced is $25.75.During the year, the company produced and sold 36,000 units at a price of $31.80 per unit and its selling and administrative expenses totaled $169,000.The company does not have any variable manufacturing overhead costs.It recorded the following variances during the year:  
Required:
1.When the company closes its standard cost variances, the cost of goods sold will increase (decrease)by how much?
2.Prepare an income statement for the year.