Answer each question as if you were the managerial accountant for the company and are presenting to the company vice-president regarding the information requested in the case study. You must not only give the correct numbers but also explain to management what variable costing is, why variable costing is useful and why the net income is different for absorption vs variable costing and also why net income is different for LIFO vs FIFO. Then follow the explanation up with a recommendation for management reporting. For each answer explain the terminology and concepts used. For example, rather than just give theproduct costet income, explain the calculation - this is a professional report from a managerial accountant to the company vice-president.

Required information [The following information applies to the questions displayed below.] O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 29 Direct labor $ 15 Variable manufacturing overhead $ Variable selling and administrative 2 Fixed costs per year: Fixed manufacturing overhead $ 550,000 Fixed selling and administrative expenses $ 130,000 During its first year of operations, O'Brien produced 96,000 units and sold 77,000 units. During its second year of operations, it produced 84,000 units and sold 98,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $71 per unit. Required: 1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words assumes that the oldest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Prepare an income statement for Year 1, Year 2, and Year 3. O'Brien Company Variable Costing Income Statement Year 1 Year 2 Year 3 Sales $ 5,467,000 $ 6,958,000 $ 5,467,000 Variable expenses: Variable cost of goods sold 3,850,000 4,900,000 3,850,000 Variable selling and administrative 154,000 196,000 154,000 Total variable expenses 4,004,000 5,096,000 4,004,000 Contribution margin 1,463,000 1,862,000 1,463,000 Fixed expenses Fixed manufacturing overhead 650,000 650,000 550,000 Fixed selling and administrative 30,000 130,000 30,000 0 Total fixed expenses 680,000 680,000 680,000 Net operating income $ 783,000 $ 1,182,000 $ 783,000Required information [The following information applies to the questions displayed below.] O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ Direct labor $ 15 Variable manufacturing overhead $ 6 Variable selling and administrative $ 2 Fixed costs per year: Fixed manufacturing overhead $ 550,000 Fixed selling and administrative expenses $ 130,000 During its first year of operations, O'Brien produced 96,000 units and sold 77,000 units. During its second year of operations, it produced 84,000 units and sold 98,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $71 per unit. Required: 1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Compute the unit product cost for Year 1, Year 2, and Year 3. Unit Product Cost Year 1 $ 50 Year 2 $ 50 Year 3 $ 50Required information [The following information applies to the questions displayed below.] O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 29 Direct labor $ 15 Variable manufacturing overhead $6 Variable selling and administrative $ 2 Fixed costs per year: Fixed manufacturing overhead $ 550,000 Fixed selling and administrative expenses 130,000 During its first year of operations, O'Brien produced 96,000 units and sold 77,000 units. During its second year of operations, it produced 84,000 units and sold 98,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $71 per unit. 3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Complete this question by entering your answers in the tabs below. Req 3A Req 3B Compute the unit product cost for Year 1, Year 2, and Year 3. Note: Round your intermediate calculations and final answers to 2 decimal places. Unit Product Cost Year 1 $ 65.73 Year 2 $ 56.55 Year 3 $ 56.71