• 1. Assume that the company uses absorption costing:
  • a.Compute the unit product cost.
  • b.Prepare an income statement for the year.
• 2. Assume that the company uses variable costing:
  • a. Compute the unit product cost.
  • b. Prepare an income statement for the year.
• 3. The company?s controller believes that the company should have set last year?s selling price at $51 instead of $50 per unit. She estimates the company could have sold 15,000 units at a price of $51 per unit, thereby increasing the company?s gross margin by $2,000 and its net operating income by $4,000. Assuming the controller?s estimates are accurate, do you think the price increase would have been a good idea?

Maxwell Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: During the year, the company produced 20,000 units and sold 16,000 units. The selling price of the company's product is $50 per unit. Required: 1. Assume that the company uses absorption costing: o a.Compute the unit product cost. o b.Prepare an income statement for the year. 2. Assume that the company uses variable costing: o a. Compute the unit product cost. o b. Prepare an income statement for the year. 3. The company's controller believes that the company should have set last year's selling price at $51 instead of $50 per unit. She estimates the company could have sold 15,000 units at a price of $51 per unit, thereby increasing the company's gross margin by $2,000 and its net operating income by $4,000. Assuming the controller's estimates are accurate, do you think the price increase would have been a good idea