Question
Required information Skip to question [The following information applies to the questions displayed below.] OBrien Company manufactures and sells one product. The following information pertains
Required information
Skip to question
[The following information applies to the questions displayed below.]
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 | $ | 26 |
Direct labor | $ | 15 |
Variable manufacturing overhead | $ | 4 |
Variable selling and administrative | $ | 3 |
Fixed costs per year: | ||
Fixed manufacturing overhead | $ | 500,000 |
Fixed selling and administrative expenses | $ | 190,000 |
During its first year of operations, OBrien produced 99,000 units and sold 77,000 units. During its second year of operations, it produced 78,000 units and sold 95,000 units. In its third year, OBrien produced 90,000 units and sold 85,000 units. The selling price of the companys product is $79 per unit.
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.
b. Prepare an income statement for Year 1, Year 2, and Year 3.
Answer is not complete.
Complete this question by entering your answers in the tabs below.
- Req 3A
- Req 3B
Prepare an income statement for Year 1, Year 2, and Year 3. (Round your intermediate calculations to 2 decimal places.)
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