EXERCISE 4-9 Variable and Absorption Costing Unit Product Costs and Income Statements L04-1, LO4-2, L04-3 Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: 2. 3. Variable costs per unit: Manufacturing: a. b. Direct materials Direct labor..... Variable manufacturing overhead Variable selling and administrative. Fixed costs per year: Fixed manufacturing overhead.. Fixed selling and administrative expenses.. During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $60 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. Assume the company uses absorption costing: Compute the unit product cost for Year 1 and Year 2. Prepare an income statement for Year 1 and Year 2. $25 $15 $5 $2 $250,000 $80,000 qoll gniad no baand 000, Explain the difference between variable costing and absorption costing net operating income in Year 1. Also, explain why the two net operating incomes differ in Year 2.
EXERCISE 4-9 Variable and Absorption Costing Unit Product Costs and Income Statements L04-1, LO4-2, L04-3 Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: 2. 3. Variable costs per unit: Manufacturing: a. b. Direct materials Direct labor..... Variable manufacturing overhead Variable selling and administrative. Fixed costs per year: Fixed manufacturing overhead.. Fixed selling and administrative expenses.. During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $60 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. Assume the company uses absorption costing: Compute the unit product cost for Year 1 and Year 2. Prepare an income statement for Year 1 and Year 2. $25 $15 $5 $2 $250,000 $80,000 qoll gniad no baand 000, Explain the difference between variable costing and absorption costing net operating income in Year 1. Also, explain why the two net operating incomes differ in Year 2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:EXERCISE 4-9 Variable and Absorption Costing Unit Product Costs and Income Statements L04-1,
LO4-2, L04-3
Walsh Company manufactures and sells one product. The following information pertains to each
of the company's first two years of operations:
od t
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......
$25
$15
$5
$2
$250,000
$80,000
d baimeingoe
During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During
its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of
the company's product is $60 per unit.
Required:
1. Assume the company uses variable costing:
a. Compute the unit product cost for Year 1 and Year
b. Prepare an income statement for Year 1 and Year 2.
2. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1 and Year 2.
b. Prepare an income statement for Year 1 and Year 2.
3. Explain the difference between variable costing and absorption costing net operating income
in Year 1. Also, explain why the two net operating incomes differ in Year 2.
HOST
Tunqol grises of
no baand 000,212 vd
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