Bascom Inc

Essay

Bascom Inc.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.