Alpine Productions Uses a Standard Cost System for Recording Transactions

question 19

Multiple Choice

Alpine Productions uses a standard cost system for recording transactions.Alpine reported the following data for the year ended December 31: Sales revenues: $550,000
Cost of goods sold (standard costing) : $382,000
Selling & admin expenses: $90,000
Variances:
$$\begin{array} { | l | r | c | } \hline \text { Sales revenue variance } & \$ 4,100 & \mathrm {~F} \\\hline \text { Direct materials cost variance } & 10 & \mathrm { U } \\\hline \text { Direct materials efficiency variance } & 250 & \mathrm {~F} \\\hline \text { Direct labor cost variance } & 65 & \mathrm { U } \\\hline \text { Direct labor efficiency variance } & 30 & \mathrm {~F} \\\hline \text { Variable overhead cost variance } & 225 & \mathrm { U } \\\hline \text { Variable overhead efficiency variance } & 95 & \mathrm {~F} \\\hline \text { Fixed overhead cost variance } & 410 & \mathrm { U } \\\hline \text { Fixed overhead volume variance } & 130 & \mathrm {~F} \\\hline\end{array}$$ What is the standard net operating income?

• A) $77,795
• B) $81,895
• C) $171,895
• D) $78,000

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Definitions:

Net Assets

The total assets of a company after deducting its total liabilities, representing the owners' equity in the company.

Common Shares

Equities representing ownership interests in a company, entitling holders to a share in the company's profits and voting rights in certain decisions.

Straight-Line Depreciation

An accounting method that allocates the cost of an asset evenly over its useful life.

Voting Stock

Shares in a company that give the shareholder the right to vote on company matters, such as electing the board of directors.