Compute the unit product cost for year one and two

Reference no: EM131931633

Problem

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 $28
Direct labor $16
Variable manufacturing overhead $4
Variable selling and administrative $2
Fixed costs per year:
Fixed manufacturing overhead $570,000
Fixed selling and administrative expenses $100,000

During its first year of operations, O'Brien produced 93,000 units and sold 71,000 units. During its second year of operations, it produced 79,000 units and sold 96,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $77 per unit.

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 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.

Reference no: EM131931633

Questions Cloud

Explain data collection methods : BSBMKG401 Profile the Market - identify relevant information relating to the Australian Marketing Institute Code of Professional Conduct

How often is interest compounded : According to SFU's Fees and Tuition policy, outstanding fees must be paid by the due date of each term. A late fee interest will be assessed on the outstanding.

What are equivalent units of production for direct material : What are the equivalent units of production for direct material? What are the equivalent units of production for conversion?

Is pauls attorney correct that not warning before the police : Paul was subsequently arrested for the shooting and when the prosecutor attempted to introduce Paul's conversation on the porch with the police.

Compute the unit product cost for year one and two : Compute the unit product cost for Year 1, Year 2, and Year 3. Prepare an income statement for Year 1, Year 2, and Year 3.

Overly tolerant of temperamental characteristics : Conversely, do you think it would cause them to be overly tolerant of temperamental characteristics that might need to be modified for the child

Development of gender roles for children : What is the effect of play activities on the development of gender roles for children? Do you think children should play with gender specific toys? Why?

How to generate interest expenses : ABC's return on equity (net income / shareholders equity) was very poor last year, but management has come up with a plan to improve things.

How is stan gaining any understanding : How is Stan gaining any understanding of where he is in the present, the now? This question is from Corey's Gestalt therapy with Stan.

User Account

All Pages