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Ogilvy Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable cost per unit
Ogilvy Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable cost per unit Direct materials 25 Fixed costs per year Direct labor $1,242,000 $ 831,000 260,000 Fixed manufacturing overhead Fixed selling and administrative expenses The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Ogilvy produced 69,000 units and sold 69,000 units. During its second year of operations, it produced 69,000 units and sold 65,400 units. In its third year, Ogilvy produced 69,000 units and sold 72,600 units. The selling price of the company's product is $59 per unit. Required: 1. Assume the company uses super-variable costing: 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. Assume the company uses a variable costing system that assigns $18 of direct labor cost to each unit produced: 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. 3. Reconcile the difference between the super-variable costing and variable costing net operating incomes in Years 1, 2, and 3. Complete this question by entering your answers in the tabs below. Req 1B Req 2A Req 2B Req 3 Req 1A Compute the unit product cost for Year 1, Year 2, and Year 3. Assume the company uses super-variable costing Unit Product Cost 25 Year 1 $ Year 2 25 Year 3 25 Req 1A Req 1B Req 2A Req 2B Req 3 Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses super-variable costing. Ogilvy Company Super-Variable Costing Income Statement Year 1 Year 2 Year 3 Sales $ 4,071,000 3,858,600 4,283,400| Variable cost of goods sold Contribution margin 4,071,000 3,858,600 4,283,400 Fixed expenses Direct labor Fixed manufacturing overhead Fixed selling and administrative Total fixed expenses 0 0 C $ 4,071,000 3,858,600 4,283,400 Net operating income(loss) Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 Compute the unit product cost for Year 1, Year 2, and Year 3. Assume the company uses a variable costing system that assigns $18 of direct labor cost to each unit produced Unit Product Cost Year 1 Year 2 Year 3 Req 1B Req 2A Req 2B Req 3 Req 1A Prepare an income statement for Year 1, Year 2, and Year 3. Assume the company uses a variable costing system that assigns $18 of direct labor cost to each unit produced. Ogilvy Company Variable Costing Income Statement Year 1 Year 2 Year 3 C 0 Fixed expenses: Total fixed expenses 0 C 0 Net operating income (loss) C C 0 $ EA EA O Complete this question by entering your answers in the tabs below. Req 1A Req 1B Req 2A Req 2B Req 3 Reconcile the difference between the super-variable costing and variable costing net operating incomes in Years 1, 2, and 3 Year Year 2 Year 3 Super-variable costing net operating income (loss) Variable costing net operating income (loss) C 0
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