The O'Brien Company manufactures and sells a product.The following information pertains to each of the company's first
Question:
The O'Brien Company manufactures and sells a product. The following information pertains to each of the company's first three years of operations: |
Variable costs per unit: | |
Producing: | |
Direct materials | 28 dollars |
direct labor | 14 dollars |
Variable production load | 5 dollars |
Variable sales and management | 2 dollars |
Annual fixed costs: | |
Fixed production load | 530.000 $ |
Fixed selling and administrative expenses | 150.000 $ |
During its first year of operation, O'Brien produced 96,000 units and sold 73,000 units. In its second year of operation, it produced 81,000 units and sold 99,000 units. O'Brien produced 81,000 units and sold 76,000 units in its third year. The selling price of the company's product is $75 per unit. |
3. | Suppose the company uses absorption costing and a FIFO inventory flow assumption (FIFO stands for first-in, first-out. In other words, it assumes that the oldest units in inventory are sold first): |
A. | Calculate the unit product cost for Year 1, Year 2, and Year 3 . (Round your intermediate calculations and final answers to 2 decimal places.) |
|
Prepare an income statement for Year 1, Year 2, and Year 3 . (Round your intermediate calculations to 2 decimal places.)
|
Suppose 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. | Calculate the unit product cost for Year 1, Year 2, and Year 3 . (Round your intermediate calculations and final answers to 2 decimal places.) |
|
Prepare an income statement for Year 1, Year 2, and Year 3 . (Round your intermediate calculations to 2 decimal places.)
|
Managerial Accounting for Managers
ISBN: 978-1259578540
4th edition
Authors: Eric Noreen, Peter Brewer, Ray Garrison