Reference no: EM132965453

O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations:
Variable Costs per Unit:
Manufacturing:
Direct Materials $ 32
Direct Labor $20
Variable Manufacturing Overhead $4
Variable selling and administrative $3
Fixed costs per year:
Fixed manufacturing overhead $660,000
Fixed selling and administrative expenses $120,000

During its first year of operations, O'Brien produced 100,000 units and sold 80,000 units. During its second year of operations, it produced 75,000 units and sold 90,000 units. In its third year, O'Brien produced 80,000 units and sold 75,000 units. The selling price of the company's product is $75 per unit.

Caveat: Treat each question separately. Ignore income taxes. Assume no beginning or ending inventories. Please provide calculations and backup in Excel. Provide analysis supporting clearly by the case data and accounting principles. Use proper Contribution Income Statement formatting.
Required:
1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes the oldest units in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3
b. Provide an income statement for Year 1, Year 2, and Year 3.
2. Assume the company uses variable costing and LIFO inventory flow assumption (LIFO means last-in first-out. In other words, assume the newest units in inventory are sold first):
a. Compute the unit product cost for Year1, and Year 2, and Year 3.
b. Provide an income statement for Year 1, Year 2, and Year 3.
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. Provide an income statement for Year1, Year 2, and Year 3.
4. Assume 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 unit in inventory are sold first):
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Provide an income statement for Year 1, Year 2, and Year 3.