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

11ea7998_5d02_1991_911b_05ffae14151a_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_5d02_1992_911b_6b58f80a3551_TB2627_00_TB2627_00

Mccreary Corporation Manufactures One Product