Grafton Corporation Manufactures One Product

question 89

Essay

Grafton Corporation 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 $38.85.During the year,the company produced and sold 28,200 units at a price of $50.10 per unit and its selling and administrative expenses totaled $120,000.The company does not have any variable manufacturing overhead costs.It recorded the following variances during the year:
Required:
Prepare an income statement for the year.

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Definitions:

Lease Transfers Ownership

A lease agreement that includes a provision allowing the lessee to acquire ownership of the asset at the end of the lease term.

NPV

NPV (Net Present Value) is a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time.

Cash Inflow

The total amount of money being transferred into a company, usually from operations, investments, or financing activities.

Residual Value

The estimated value of an asset at the end of its useful life.