Gersbach 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 company has provided the following information: 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)($2,349)
B)$85,915
C)$70,200
D)$145,368

Question

Gersbach 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 company has provided the following information:  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)($2,349) 
B)$85,915 
C)$70,200 
D)$145,368

Quizplus · Accepted Answer

11ea7998_5d01_7d4e_911b_effc85e2a815_TB2627_00_TB2627_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. 11ea7998_5d01_a45f_911b_9dd5bddfaeef_TB2627_00_TB2627_00

Gersbach Corporation Manufactures One Product