CS_3_QA1_PIR: Req 1A: Compute the unit product cost for Year 1, Year 2, and Year 3. Unit Product CostYear 1 Year 2 Year 3 Req 1B: Prepare an income statement for Year 1, Year 2, and Year 3. O’Brien CompanyVariable Costing Income Statement Year 1Year 2Year 3 Variable expenses: Total variable expenses000 000Fixed expenses: Total fixed expenses000 $0$0$0 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 firstthree years of operations:Variable costs per unit:Manufacturing:Direct materials30Direct labor14Variable manufacturing overheadVariable selling and administrativeFixed costs per year:Fixed manufacturing overheadFixed selling and administrative expenses42$530,000$140,000During its first year of operations, O'Brien produced 90,000 units and sold 71,000 units. During its second year ofoperations, it produced 76,000 units and sold 90,000 units. In its third year, O'Brien produced 88,000 units and sold83,000 units. The selling price of the company's product is $76 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, itassumes 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.Complete this question by entering your answers in the tabs below.Req 1AReq 1B

Answered: O'Brien Company manufactures and sells…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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CS_3_QA1_PIR:

Req 1A: Compute the unit product cost for Year 1, Year 2, and Year 3.

	Unit Product Cost
Year 1
Year 2
Year 3

Req 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	0	0	0
	0	0	0
Fixed expenses:




Total fixed expenses	0	0	0
	$0	$0	$0

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
30
Direct labor
14
Variable manufacturing overhead
Variable selling and administrative
Fixed costs per year:
Fixed manufacturing overhead
Fixed selling and administrative expenses
4
2
$530,000
$140,000
During its first year of operations, O'Brien produced 90,000 units and sold 71,000 units. During its second year of
operations, it produced 76,000 units and sold 90,000 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 $76 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.
Complete this question by entering your answers in the tabs below.
Req 1A
Req 1B

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Product cost is the cost incurred by an entity on the manufacture of goods.

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