Problem 5 (Super-Variable Costing and Variable Costing Unit Product Costs and Income Statements) Lyns Company manufactures and sells one product. The following information pertains to the company's first year of operations: Variable cost per unit: Direct materials Fixed costs per year. Direct labor Fixed manufacturing overhead Fixed selling and administrative expenses 130 P7,500,000 P4,200,000 P1,100,000 The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Lyns produced 60,000 units and sold 52,000 units. The selling price of the company's product is P400 per unit. Required: 1. Assume the company uses super-variable costing: a. Compute the unit product cost for the year. b. Prepare an income statement for the year. 2. Assume the company uses a variable costing system that assigns P125.00 of direct labor cost to each unit produced: a. Compute the unit product cost for the year. b. Prepare an income statement for the year. 3. Prepare a reconciliation that explains the difference between the super- variable costing and variable costing net operation incomes.

Problem 5 (Super-Variable Costing and Variable Costing Unit Product Costs and Income Statements) Lyns Company manufactures and sells one product. The following information pertains to the company's first year of operations: Variable cost per unit: Direct materials Fixed costs per year. Direct labor Fixed manufacturing overhead Fixed selling and administrative expenses 130 P7,500,000 P4,200,000 P1,100,000 The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Lyns produced 60,000 units and sold 52,000 units. The selling price of the company's product is P400 per unit. Required: 1. Assume the company uses super-variable costing: a. Compute the unit product cost for the year. b. Prepare an income statement for the year. 2. Assume the company uses a variable costing system that assigns P125.00 of direct labor cost to each unit produced: a. Compute the unit product cost for the year. b. Prepare an income statement for the year. 3. Prepare a reconciliation that explains the difference between the super- variable costing and variable costing net operation incomes.

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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! Required information Case 4-29 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO4-1, LO4-2] [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 Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 570,000 $ 110,000 During its first year of operations, O'Brien produced 100,000 units and sold 74,000 units. During its second year of operations, it produced 76,000 units and sold 97,000 units. In its third year, O'Brien produced 81,000 units and sold 76,000 units. The selling price of the company's product is $77 per unit. Case 4-29 Part-3 (Algo) 3. Assume the company uses absorption costing and a FIFO inventory flow…
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