CS_3_QA3_LA_2ND_CHReq 3A: 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 CostYear 1 Year 2 Year 3 Req 3B: Prepare an income statement for Year 1, Year 2, and Year 3. (Round your intermediate calculations to 2 decimal places.) O’Brien CompanyAbsorption Costing Income Statement Year 1Year 2Year 3Salesselected answer correct Cost of goods soldselected answer correct Gross marginselected answer correct Selling and administrative expensesselected answer correct Net operating incomeselected answer correct 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 materials28Direct labor15Variable manufacturing overheadVariable selling and administrativeFixed costs per year:Fixed manufacturing overheadFixed selling and administrative expenses44$530,000$100,000During its first year of operations, O'Brien produced 93,000 units and sold 77,000 units. During its second year ofoperations, it produced 83,000 units and sold 94,000 units. In its third year, O'Brien produced 89,000 units and sold84,000 units. The selling price of the company's product is $79 per unit.3. Assume the company uses absorption 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.

Answered: Req 3A: Compute the unit product cost…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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CS_3_QA3_LA_2ND_CH

Req 3A: 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
Year 1
Year 2
Year 3

Req 3B:

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
	Year 1	Year 2	Year 3
Salesselected answer correct
Cost of goods soldselected answer correct
Gross marginselected answer correct
Selling and administrative expensesselected answer correct
Net operating incomeselected answer correct

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
28
Direct labor
15
Variable manufacturing overhead
Variable selling and administrative
Fixed costs per year:
Fixed manufacturing overhead
Fixed selling and administrative expenses
4
4
$530,000
$100,000
During its first year of operations, O'Brien produced 93,000 units and sold 77,000 units. During its second year of
operations, it produced 83,000 units and sold 94,000 units. In its third year, O'Brien produced 89,000 units and sold
84,000 units. The selling price of the company's product is $79 per unit.
3. Assume the company uses absorption 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.

Expert Solution

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Income statement refers to a statement which shows the revenue and expense of the company of a particular period and helps to determine the Net Profit/Loss of that period.

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