Alpine Productions Uses a Standard Costing System for Recording Transactions;

question 122

Multiple Choice

Alpine Productions uses a standard costing system for recording transactions; they also prepare an internal-use income statement using standard cost methodology. At the end of 2011, Alpine reported the following data:
Sales revenues: $500,000
Cost of goods sold (standard costing) $382,500
Marketing & admin expenses $105,000
Variances:
$\begin{array}{|l|r|c|}\hline \text { Sales revenue } & \$ 4,000 & F \\\hline \text { Direct materials price variance } & 20 & \mathrm{U} \\\hline \text { Direct materials efficiency variance } & 300 & \mathrm{~F} \\\hline \text { Direct labor price variance } & 75 & \mathrm{U} \\\hline \text { Direct labor efficiency variance } & 10 & \mathrm{~F} \\\hline \text { Variable overhead spendling variance } & 225 & \mathrm{U} \\\hline \text { Variable overhead efficiency variance } & 80 & \mathrm{~F} \\\hline \text { Fixed overhead spending variance } & 420 & \mathrm{U} \\\hline \text { Fixed overhead volume variance } & 110 & \mathrm{~F} \\\hline\end{array}$
Using standard costing methodology, the net operating income is:

• A) $14,990.
• B) $16,260.
• C) $13,975.
• D) $87,740.

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Definitions:

Direct Labour

Employees who play a fundamental role in the assembly or creation of a company's products, contributing directly to the output.

Factory Overhead

Costs related to operating a manufacturing facility not directly tied to a specific product, including maintenance, utilities, and equipment depreciation.

Process Manufacturers

Companies that produce goods in bulk by combining ingredients or raw materials through a sequence of measured steps.

Continuous Flow

A production process that operates without any interruptions, producing goods at a constant rate.