A: Compute the unit product cost for Year 1, Year 2, and Year 3. Unit Product Cost Year 1 Year 2 Year 3 1B: Prepare an income statement for Year 1, Year 2, and Year 3. O’Brien Company Variable Costing Income Statement Year 1 Year 2 Year 3 Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses
A: Compute the unit product cost for Year 1, Year 2, and Year 3. Unit Product Cost Year 1 Year 2 Year 3 1B: Prepare an income statement for Year 1, Year 2, and Year 3. O’Brien Company Variable Costing Income Statement Year 1 Year 2 Year 3 Variable expenses: Total variable expenses Fixed expenses: Total fixed expenses
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
CS_3_LA_QA1
1A: Compute the unit product cost for Year 1, Year 2, and Year 3.
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1B: Prepare an income statement for Year 1, Year 2, and Year 3.
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![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
28
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Fixed costs per year:
Fixed manufacturing overhead
Fixed selling and administrative expenses
15
4
4
$530,000
$100,000
During its first year of operations, O'Brien produced 93,000 units and sold 77,000 units. During its second year of
operations, it produced 83,000 units and sold 94,000 units. In its third year, O'Brien produced 89,000 units and sold
84,000 units. The selling price of the company's product is $79 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb48b944a-de75-4d58-aa97-6215805e26f6%2F43cf3f7f-6bf5-4146-a7b3-e7490aa69581%2F3e8hpr_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
28
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Fixed costs per year:
Fixed manufacturing overhead
Fixed selling and administrative expenses
15
4
4
$530,000
$100,000
During its first year of operations, O'Brien produced 93,000 units and sold 77,000 units. During its second year of
operations, it produced 83,000 units and sold 94,000 units. In its third year, O'Brien produced 89,000 units and sold
84,000 units. The selling price of the company's product is $79 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.
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