Exercise 6-9 (Static) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2, LO6-3]

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	$	15
Variable manufacturing overhead	$	5
Variable selling and administrative	$	2
Fixed costs per year:
Fixed manufacturing overhead	$	250,000
Fixed selling and administrative expenses	$	80,000

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 $60 per unit.

Required:

1. 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.

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.

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

Check my work 7 Exercise 6-9 (Static) Variable and Absorption Costing Unit Product Costs and Income Statements (L06-1, LO6-2, LO6-3] 1.66 points Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: eBook Hint s 25 Print Variable costs per unit Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and adminiatrative expenses S $ 5 2 References $ 250,000 $ 80,000 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 $60 per unit. Required: 1. 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. 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. 3. 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 Reg 2B Req 3 Assume the company uses variable costing. Compute the unit product cost for Year 1 and Year 2. Year 1 Year 2 Unit product cost 45 $ 45 Check my work 7 Reg 1A Reg 1B Req 2A Reg 2B Req 3 Assume the company uses variable costing. Prepare an income statement for Year 1 and Year 2. 1.66 points Walsh Company Income Statement Year 1 Year 2 cBook Hint Print References 0 0 0 0 0 Net operating Income (loss) 0$ 0 Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Reg 3 Assume the company uses absorption costing. Compute the unit product cost for Year 1 and Year 2. (Round your answer to 2 decimal places.) Year 1 Year 2 Unit product cost Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req3 Assume the company uses absorption costing. Prepare an income statement for Year 1 and Year 2. (Round your intermediate calculations to 2 decimal places.). Walsh Company Income Statement Year 1 Year 2 Net operating income (loss) $ 0 0