Chapter 6

Part 1A

Part 1B

Part 2A

Part 2B

Part 3

Ogilvy Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: $ 26 Variable cost per unit: Direct materials Fixed costs per year: Direct labor Fixed manufacturing overhead Fixed selling and administrative expenses $1,330,000 $ 832,000 $ 266,000 The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Ogilvy produced 70,000 units and sold 70,000 units. During its second year of operations, it produced 70,000 units and sold 66,200 units. In its third year, Ogilvy produced 70,000 units and sold 73,800 units. The selling price of the company's product is $61 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 $19 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. 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 super-variable costing. Unit Product Cost Year 1 Year 2 Year 3 Req 1A Req 1B Reg 2A Req 2B Req3 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 0 0 Fixed expenses: Total fixed expenses Net operating income(loss) 0 $ 0 $ Req 1A Req 1B Reg 2A Req 2B Req3 Compute the unit product cost for Year 1, Year 2, and Year 3. Assume the company uses a variable costing system that assigns $19 of direct labor cost to each unit produced. Unit Product Cost Year 1 Year 2 Year 3 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 a variable costing system that assigns $19 of direct labor cost to each unit produced. Ogilvy Company Variable Costing Income Statement Year 1 Year 2 Year 3 0 0 Fixed expenses: Total fixed expenses Net operating income (loss) Tool $ 0 $ 0 $ Req 1A Req 1B Req 2A Req 2B Reg 3 Reconcile the difference between the super-variable costing and variable costing net operating incomes in Years 1, 2, and 3. Year 1 Year 2 Year 3 Super-variable costing net operating income (loss) Variable costing net operating income (loss) 0 $ 0 $