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 Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead $27 $17 $5 $ 3 Fixed selling and administrative expenses $ 500,000 $140,000 During its first year of operations, O'Brien produced 99,000 units and sold 79,000 units. During its second year of operations, it produced 80,000 units and sold 95,000 units. In its third year, O'Brien produced 90,000 units and sold 85,000 units. The selling price of the company's product is $77 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.

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 Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead $27 $17 $5 $ 3 Fixed selling and administrative expenses $ 500,000 $140,000 During its first year of operations, O'Brien produced 99,000 units and sold 79,000 units. During its second year of operations, it produced 80,000 units and sold 95,000 units. In its third year, O'Brien produced 90,000 units and sold 85,000 units. The selling price of the company's product is $77 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.

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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Year 1 Year 2