Mccreary Corporation manufactures one product.It does not maintain any beginning or ending Work in Process 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.The standard cost of the company's product is $28.00per unit.During the year the company sold 27,500 units at $36.30 per unit.The actual selling and administrative expenses were $121,000 for the year.The company does not have any variable manufacturing overhead costs and it recorded the following variances during the year:
The net operating income for the year is closest to:
A) $107,250
B) $55,272
C) $118,446
D) $79,816

Question

Mccreary Corporation manufactures one product.It does not maintain any beginning or ending Work in Process 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.The standard cost of the company's product is $28.00per unit.During the year the company sold 27,500 units at $36.30 per unit.The actual selling and administrative expenses were $121,000 for the year.The company does not have any variable manufacturing overhead costs and it recorded the following variances during the year:
 The net operating income for the year is closest to:
A) $107,250 
B) $55,272 
C) $118,446 
D) $79,816

Quizplus · Accepted Answer

11ea7761_16d9_1625_81a5_dfca0345e67c_TB2580_00 An unfavorable total variance has the effect of increasing Cost of Goods Sold and thereby decreasing Retained Earnings. A favorable variance has the opposite effects on Cost of Goods Sold and Retained Earnings.
 11ea7761_16d9_3d36_81a5_07384b8cb4cc_TB2580_00

Mccreary Corporation Manufactures One Product