Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

OBrien Company manufactures and sells one product. The following information pertains to each of the companys first three years of operations: Variable costs per unit:

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

Variable costs per unit:
Manufacturing:
Direct materials $32
Direct labor $20
Variable manufacturing overhead $4
Variable selling and administrative $3
Fixed costs per year:
Fixed manufacturing overhead $660,000
Fixed selling and administrative expenses $120,000

During its first year of operations, OBrien produced 100,000 units and sold 80,000 units. During its second year of operations, it produced 75,000 units and sold 90,000 units. In its third year, OBrien produced 80,000 units and sold 75,000 units. The selling price of the companys product is $75 per unit.

1.

value: 25.00 points

Required information

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.

2.

value: 25.00 points

Required information

2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest 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.

References

eBook & Resources

Financial StatementsLearning Objective: 05-01 Explain how variable costing differs from absorption costing and compute unit product costs under each method.

Difficulty: 3 HardLearning Objective: 05-02 Prepare income statements using both variable and absorption costing.

Check my work

3.

value: 25.00 points

Required information

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. (Round your intermediate calculations and final answers to 2 decimal places.)

b. Prepare an income statement for Year 1, Year 2, and Year 3. (Round your intermediate calculations to 2 decimal places.)

References

eBook & Resources

Financial StatementsLearning Objective: 05-01 Explain how variable costing differs from absorption costing and compute unit product costs under each method.

Difficulty: 3 HardLearning Objective: 05-02 Prepare income statements using both variable and absorption costing.

Check my work

4.

value: 25.00 points

Required information

4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first):

a. Compute the unit product cost for Year 1, Year 2, and Year 3. (Round your intermediate calculations and final answers to 2 decimal places.)

b. Prepare an income statement for Year 1, Year 2, and Year 3. (Round your intermediate calculations to 2 decimal places.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Prescription Audit And Client Satisfaction A Health Service Research Study Based On Outdoor Patients

Authors: Amitabha Chattopadhyay

1st Edition

3843355541, 978-3843355544

More Books

Students also viewed these Accounting questions