Exercise $6-9($Algo$)$ Variable and Absorption Costing Unit Product Costs and Income Statements $[$LO$6-1,$

L$06-2,$ L$06-3]$

Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of

operations:

Variable costs per unit:

Manufacturing:

Direct materials $$23$

Direct labor $ $12$

Variable manufacturing overhead $$4$

Variable selling and administrative $$3$

Fixed costs per year:

Fixed manufacturing overhead $$240,000$

Fixed selling and administrative expenses $$90,000$

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 company's product is $$60$ per unit.

Required:

Assume the company uses variable costing:

a$.$ Compute the unit product cost for Year $1$ and Year $2.$

b$.$ Prepare an income statement for Year $1$ and Year $2.$

Assume the company uses absorption costing:

a$.$ Compute the unit product cost for Year $1$ and Year $2.$

b$.$ Prepare an income statement for Year $1$ and Year $2.$

Reconcile the difference between variable costing and absorption costing net operating income in Year $1.$

Complete this question by entering your answers in the tabs below.

Req $1A$

Req $1B$

Req $2A$

Req $2$B

Req $3$

Assume the company uses variable costing. Compute the unit product cost for year $1$ and year $2.$