CS_3_WR_PIR: CASE 4-29 Variable and Absorption Costing Unit Product Costs and Income Statements LO4-1, LO4-2O'Brien Company manufactures and sells one product. The following information pertains to eachof the company's first three years of operations:Variable costs per unit:Manufacturing:Direct materials..$32$20$4$3Direct labor ....Variable manufacturing overhead.Variable selling and administrativeFixed costs per year:Fixed manufacturing overhead .Fixed selling and administrative expenses$660,000$120,000During 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 thirdyear, O'Brien produced 80,000 units and sold 75,000 units. The selling price of the company'sproduct is $75 per unit.Chapter 4Required:1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO meansfirst-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 3.2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO meanslast-in first-out. In other words, it assumes that the newest units in inventory are sold first):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. 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 areа.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 3.4. 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 units in inventory aresold first):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.а.

Answered: 1. Assume the company uses variable…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

CS_3_WR_PIR:

CASE 4-29 Variable and Absorption Costing Unit Product Costs and Income Statements LO4-1, LO4-2
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
$20
$4
$3
Direct labor ....
Variable manufacturing overhead.
Variable selling and administrative
Fixed costs per year:
Fixed manufacturing overhead .
Fixed selling and administrative expenses
$660,000
$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.
Chapter 4
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.
2. Assume the company uses variable 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):
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. 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
а.
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.
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 units in inventory are
sold first):
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.
а.

Expert Solution

Step 1

As per our protocol we provide solution to the one question only or to the first three sub-parts only but you have asked multiple sub-parts and questions kindly resubmit remaining questions along with specifying the question number to get the solution.

Variable costing is the costing method of valuing the product cost of the units produced during the year on which only the variable direct costs are taken into consideration in order to compute the product cost per unit.

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Follow-up Questions

Read through expert solutions to related follow-up questions below.

Follow-up Question

O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:

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.

Required:

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):
1. Compute the unit product cost for Year 1, Year 2, and Year 3.
2. Prepare an income statement for Year 1, Year 2, and Year 3.
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 units in inventory are sold first):
1. Compute the unit product cost for Year 1, Year 2, and Year 3.
2. Prepare an income statement for Year 1, Year 2, and Year 3.

Solution

by Bartleby Expert

SEE SOLUTION

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.