Question
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 | $30 | |
Direct labor | $17 | |
Variable manufacturing overhead | $5 | |
Variable selling and administrative | $2 | |
Fixed costs per year: | ||
Fixed manufacturing overhead | $520,000 | |
Fixed selling and administrative expenses | $170,000 | |
During its first year of operations, OBrien produced 95,000 units and sold 72,000 units. During its second year of operations, it produced 78,000 units and sold 96,000 units. In its third year, OBrien produced 82,000 units and sold 77,000 units. The selling price of the companys product is $79 per unit.
1.
value: 1.00 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.
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.
Ask your instructor a questionCheck my work
2.
value: 1.00 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.
Ask your instructor a questionCheck my work
3.
value: 1.00 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.
Ask your instructor a questionCheck my work
4.
value: 1.00 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.)
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