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 Case 6-29 Part-1 (Algo) During its first year of operations, O'Brien produced 97,000 units and sold 73,000 units. During its second year of operations, it produced 76,000 units and sold 95,000 units. In its third year, O'Brien produced 88,000 units and sold 83,000 units. The selling price of the company's product is $74 per unit. a. Compute the unit product cost for Year 1, Year 2, and Year 3. D. 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, assumes the oldest units in inventory are sold first): Req 1A Year 1 Year 2 Year 3 Complete this question by entering your answers in the tabs below. $26 $ 14 $6 $3 Req 1B Compute the unit product cost for Year 1, Year 2, and Year 3. $ 550,000 $ 190,000 Unit Product Cost
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 Case 6-29 Part-1 (Algo) During its first year of operations, O'Brien produced 97,000 units and sold 73,000 units. During its second year of operations, it produced 76,000 units and sold 95,000 units. In its third year, O'Brien produced 88,000 units and sold 83,000 units. The selling price of the company's product is $74 per unit. a. Compute the unit product cost for Year 1, Year 2, and Year 3. D. 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, assumes the oldest units in inventory are sold first): Req 1A Year 1 Year 2 Year 3 Complete this question by entering your answers in the tabs below. $26 $ 14 $6 $3 Req 1B Compute the unit product cost for Year 1, Year 2, and Year 3. $ 550,000 $ 190,000 Unit Product Cost
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Transcribed Image Text:**O’Brien Company Cost and Income Analysis**
**Company Overview:**
O'Brien Company manufactures and sells one product. The following details summarize their operations for the first three years.
**Variable Costs per Unit:**
- **Manufacturing:**
- Direct materials: $26
- Direct labor: $14
- Variable manufacturing overhead: $6
- **Variable Selling and Administrative:**
- Cost per unit: $3
**Fixed Costs per Year:**
- Fixed manufacturing overhead: $550,000
- Fixed selling and administrative expenses: $190,000
**Production and Sales Information:**
- **Year 1:** Produced 97,000 units, sold 73,000 units
- **Year 2:** Produced 76,000 units, sold 95,000 units
- **Year 3:** Produced 88,000 units, sold 83,000 units
**Selling Price:**
- The selling price of the company’s product is $74 per unit.
**Case Study Instructions:**
*Case 6-29 Part-1 (Algo)*
**Required:**
1. Assume the company uses variable costing and a FIFO (First-In, First-Out) inventory flow assumption, meaning the oldest units in inventory are sold first. Perform the following tasks:
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.
A section is provided for inputting answers:
- __Unit Product Cost__: Enter the computed costs for each year in the table provided:
- Year 1:
- Year 2:
- Year 3:
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