Question
Lynch Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations: Variable costs per unit: Manufacturing:
Lynch Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations:
| Variable costs per unit: | |
|---|---|
| Manufacturing: | |
| Direct materials | $ 15 |
| Direct labor | $ 5 |
| Variable manufacturing overhead | $ 1 |
| Variable selling and administrative | $ 1 |
| Fixed costs per year: | |
| Fixed manufacturing overhead | $ 286,000 |
| Fixed selling and administrative | $ 196,000 |
During the year, the company produced 26,000 units and sold 22,000 units. The selling price of the companys product is $46 per unit.
Required:
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.
Compute the unit product cost. Assume that the company uses absorption costing.
|
Prepare an income statement for the year. Assume that the company uses absorption costing.
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Compute the unit product cost. Assume that the company uses variable costing.
|
Prepare an income statement for the year. Assume that the company uses variable costing.
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Introduction to Managerial Accounting
Authors: Peter Brewer, Ray Garrison, Eric Noreen
7th edition
978-1259675539, 125967553X, 978-1259594168, 1259594165, 78025796, 978-0078025792
