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chapter 7 question 10

Required information (The following information applies to the questions displayed below.) 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 Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ $ $ $ 29 15 6 3 $540,000 $168,000 During its first year of operations, O'Brien produced 91,000 units and sold 79,000 units. During its second year of operations, it produced 79,000 units and sold 86.000 units. In its third year, O'Brien produced 86,000 units and sold 81,000 units. The selling price of the company's product is $76 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. 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 Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Compute the unit product cost for Year 1, Year 2, and Year 3 Year 1 Year 2 Year 3 Unit Product Cost $ 50 $50 $ 50 Reg 1A Reg 1B Prepare an income statement for Year 1, Year 2, and Year 3. 4 Year 3 O'Brien Company Variable Costing Income Statement Year 1 Year 2 Sales Variable expenses Vanable cost of goods sold Variable selling and administrativo 0 0 0 0 0 0 Total variable expenses Contribution margin Fixed expenses Fixed selling and administrative Fixed manufacturing overhead 0 0 0 Total fixed expenses Net operating income S 0 $ 0 $ 0

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