O'Brien Company namufactures and sells one product.The following information pertains to each of the company's first three years of operations.

Variable cost per unit:

Manufacturing:

Direct materials $26

Direct labor $17

Variable manufacturing overhead $4

Variable selling & administrative $2

Fixed costs per year:

Fixed manufacturing overhead $540,000

Fixed sellingn & administrative expense $160,000

During its first year of operations, O'Brien produced 96,000 units and sold 78,000 units. During its second year of operations, it produced 82,000 units and sold 95,000 units. In its third year, O'Brien produced 86,000 units and sold 81,000 units. The selling price of the companys products is $77 per unit.

1. Required:

1. Assume the company uses variable costiong and FIFO inventory flow assumption (FIFO means first-in first-out. In other words, if assumes that the oldest units in inverntory are sold first):

a. Compute the unit product cost for Year 1, Year 2 and Year 3

Year 1..............................Unit Product Cost............................

Year 2..............................Unit Product Cost...........................

Year 3..............................Unit Product Cost...........................

b. Prepare a income statement for Year 1, Year 2 and Year 3

O'Brien Company

Variable Costing Income Statement

Year 1 Year 2 Year 3

Variable expenses

Total variable expenses

Fixed expenses:

Total fixed expenses

2. Assume the company uses variable costing and 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 porduct cost for Year 1, Year 2, and Year 3

Year 1..............................Unit Product Cost.......................

Year 2..............................Unit Product Cost.......................

Year 3..............................Unit Product Cost.......................

b. Prepare an income statement for Year 1, Year 2, and Year 3

O'Brien Company

Variable Costing Income Statement

Year 1 Year 2 Year 3

Variable expenses

Total variable expenses

Fixed expenses:

Total fixed expenses

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, Year 3. (Round your intermediate calculations and final answers to 2 decimal places)

Year 1......................................Unit Product Cost................................

Year 2......................................Unit Product Cost................................

Year 3......................................Unit Product Cost..............................

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

O'Brien Company

Absorption Costing Income Statement

Year 1 Year 2 Year 3

4. Assume the company uses absorption costing and a LIFO inventory flow assumptions (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.)

Year1....................................Unit Product Cost........................

Year 2..................................Unit Product Cost...........................

Year 3..................................Unit Product Cost..........................

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

O'Brien Company

Absorption Costing Income Statement

Year 1 Year 2 Year 3