ch6 exer 3

Walsh Company manufactures and sells one product. The following information pertains to each of the companys first two years of operations:

Variable costs per unit:
Manufacturing:
Direct materials		$ 25
Direct labor		$ 16
Variable manufacturing overhead		$ 6
Variable selling and administrative		$ 5
Fixed costs per year:
Fixed manufacturing overhead	$	320,000
Fixed selling and administrative expenses	$	60,000

During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the companys product is $53 per unit.

Required:
1.	Assume the company uses variable costing:

a.

Compute the unit product cost for year 1 and year 2.

	Year 1	Year 2
Unit product cost

b.

Prepare an income statement for year 1 and year 2.

Walsh Company
Income Statement
	Year 1	Year 2
Variable expenses
Total variable expenses	0	0
	0	0
Fixed expenses
Total fixed expenses	0	0
Net operating income (loss)	$0	$0