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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 $ 30 $ 17 $4 $2 $ 600,000 $ 150,000 During its first year of operations, O'Brien produced 91,000 units and sold 72,000 units. During its second year of operations, it produced 79,000 units and sold 93,000 units. In its third year, O'Brien produced 85,000 units and sold 80,000 units. The selling price of the company's product is $74 per unit. 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): 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.

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 $ 30 $ 17 $4 $2 $ 600,000 $ 150,000 During its first year of operations, O'Brien produced 91,000 units and sold 72,000 units. During its second year of operations, it produced 79,000 units and sold 93,000 units. In its third year, O'Brien produced 85,000 units and sold 80,000 units. The selling price of the company's product is $74 per unit. 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): 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.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 Year 1 Year 2 Year 3. Req 4A During its first year of operations, O'Brien produced 91,000 units and sold 72,000 units. During its second year of operations, it produced 79,000 units and sold 93,000 units. In its third year, O'Brien produced 85,000 units and sold 80,000 units. The selling price of the company's product is $74 per unit. 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): 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. $ 30 $ 17 $4 $2 Complete this question by entering your answers in the tabs below. $ 600,000 $ 150,000 Req 48 Compute the unit product cost for Year 1, Year 2, and Year 3. (Round your intermediate calculations and final answers to 2 decimal places.) Unit Product Cost
Transcribed Image Text: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 Year 1 Year 2 Year 3. Req 4A During its first year of operations, O'Brien produced 91,000 units and sold 72,000 units. During its second year of operations, it produced 79,000 units and sold 93,000 units. In its third year, O'Brien produced 85,000 units and sold 80,000 units. The selling price of the company's product is $74 per unit. 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): 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. $ 30 $ 17 $4 $2 Complete this question by entering your answers in the tabs below. $ 600,000 $ 150,000 Req 48 Compute the unit product cost for Year 1, Year 2, and Year 3. (Round your intermediate calculations and final answers to 2 decimal places.) Unit Product Cost
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): 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. Req 4A Req 48 Prepare an income statement for Year 1, Year 2, and Year 3. (Round your intermediate calculations to 2 decimal places.) O'Brien Company Absorption Costing Income Statement $ < Req 4A 0 0 $ 0 0 $ Year 3 Rey 48 > 0
Transcribed Image Text: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): 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. Req 4A Req 48 Prepare an income statement for Year 1, Year 2, and Year 3. (Round your intermediate calculations to 2 decimal places.) O'Brien Company Absorption Costing Income Statement $ < Req 4A 0 0 $ 0 0 $ Year 3 Rey 48 > 0
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