Caterlebe Productions Uses a Standard Costing System Calculate the Standard Net Operating Income

question 42

Essay

Caterlebe Productions uses a standard costing system. At the end of 2015, the following details are found in their books.
Sales Revenues: $750,000
Cost of Goods Sold (standard costing): $400,500
Marketing & Admin expenses: $150,000
Variances:
$$\begin{array} { | l | r | l | } \hline \text { Sales Revenue } & \$ 6,000 & \text { F } \\\hline \text { Direct Materials Cost Variance } & 400 & \text { U } \\\hline \text { Direct Materials Efficiency Variance } & 375 & \text { F } \\\hline \text { Direct Labor Cost Variance } & 675 & \text { U } \\\hline \text { Direct Labor Efficiency Variance } & 150 & \text { F } \\\hline \text { Variable Overhead Cost Variance } & 250 & \text { U } \\\hline \text { Variable Overhead Efficiency Variance } & 800 & \text { F } \\\hline \text { Fixed Overhead Cost Variance } & 420 & \text { U } \\\hline \text { Fixed Overhead Volume Variance } & 100 & \text { F } \\\hline\end{array}$$ Calculate the standard net operating income.

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Definitions:

Redistributional Effects

The impact of policies or economic conditions on the distribution of income or wealth among the population, potentially altering inequality levels.

Unexpected Inflation

Unexpected inflation denotes the rate at which the general level of prices for goods and services rises, and subsequently, purchasing power falls, beyond what was anticipated.

Central Bank

The principal monetary authority of a country, responsible for regulating the money supply, issuing currency, and controlling interest rates.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including currency and various types of deposits.