Bascom Incorporated Manufactures One Product

question 334

Essay

Bascom Incorporated 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.

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Definitions:

Muscle Tissue

A tissue composed of fibers capable of contracting to produce movement in the body.

Skin Wound

A physical injury to the skin that results in damage, such as a cut, burn, or laceration.

Subcutaneous Adipose Tissue

refers to the layer of fat cells below the skin that provides insulation, energy storage, and protection.

Blood Vessel

Cylindrical vessels that transport blood throughout organs and tissues, including veins, arteries, and capillaries.