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 Fixed selling and administrative expenses $ 29 $14 $6 $3 $ 550,000 $ 130,000 During its first year of operations, O'Brien produced 99,000 units and sold 74,000 units. During its second year of operations, it produced 83,000 units and sold 103,000 units. In its third year, O'Brien produced 84,000 units and sold 79,000 units. The selling price of the company's product is $70 per unit. 2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest 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 Fixed selling and administrative expenses $ 29 $14 $6 $3 $ 550,000 $ 130,000 During its first year of operations, O'Brien produced 99,000 units and sold 74,000 units. During its second year of operations, it produced 83,000 units and sold 103,000 units. In its third year, O'Brien produced 84,000 units and sold 79,000 units. The selling price of the company's product is $70 per unit. 2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
Fixed selling and administrative expenses
$ 29
$ 14
$6
$3
$ 550,000
$ 130,000
During its first year of operations, O'Brien produced 99,000 units and sold 74,000 units. During its second year of
operations, it produced 83,000 units and sold 103,000 units. In its third year, O'Brien produced 84,000 units and sold
79,000 units. The selling price of the company's product is $70 per unit.
2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it
assumes that the newest 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd73300bb-6162-4ed3-b66f-6556c243d10a%2Fc818df31-cc81-4a53-a71a-39e0910eec05%2Fs44tukh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:!
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
Fixed selling and administrative expenses
$ 29
$ 14
$6
$3
$ 550,000
$ 130,000
During its first year of operations, O'Brien produced 99,000 units and sold 74,000 units. During its second year of
operations, it produced 83,000 units and sold 103,000 units. In its third year, O'Brien produced 84,000 units and sold
79,000 units. The selling price of the company's product is $70 per unit.
2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it
assumes that the newest 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.
Transcribed Image Text:es
Req 2A
Req 2A
Year 1
Year 2
Year 3
Compute the unit product cost for Year 1, Year 2, ar
Variable expenses:
Req 2B
Prepare an income statement for Year 1, Year 2, and Year 3.
Total variable expenses
Fixed expenses:
Req 2B
Total fixed expenses
Unit Product
Cost
O'Brien Company
Variable Costing Income Statement
Year 1
< Req 2A
Year 2
Year 3
Req 2B >
Req 2
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