Bascom Incorporated Manufactures One Product

Essay

Bascom Incorporated manufactures one product. It does not maintain any beginning or ending 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. Its standard cost per unit produced is $25.75. During the year, the company produced and sold 36,000 units at a price of $31.80 per unit and its selling and administrative expenses totaled $169,000. The company does not have any variable manufacturing overhead costs. It recorded the following variances during the year:
Required:1. When the company closes its standard cost variances, the cost of goods sold will increase (decrease) by how much?2. Prepare an income statement for the year.