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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 $ 26 $ 14 $6 $3 $ 580,000 $ 180,000 During its first year of operations, O'Brien produced 97,000 units and sold 74,000 units. During its second year of operations, it produced 84,000 units and sold 102,000 units. In its third year, O'Brien produced 86,000 units and sold 81,000 units. The selling price of the company's product is $73 per unit. a. Compute the unit product cost for Year 1, Year 2, and Year 3. o. Prepare an income statement for Year 1, Year 2, and Year 3. Required: Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it ssumes that the oldest units in inventory are sold first):

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 $ 26 $ 14 $6 $3 $ 580,000 $ 180,000 During its first year of operations, O'Brien produced 97,000 units and sold 74,000 units. During its second year of operations, it produced 84,000 units and sold 102,000 units. In its third year, O'Brien produced 86,000 units and sold 81,000 units. The selling price of the company's product is $73 per unit. a. Compute the unit product cost for Year 1, Year 2, and Year 3. o. Prepare an income statement for Year 1, Year 2, and Year 3. Required: Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it ssumes that the oldest units in inventory are sold first):

FINANCIAL ACCOUNTING
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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Req 1A Req 1B Prepare an income statement for Year 1, Year 2, and Year 3. O'Brien Company Variable Costing Income Statement Year 1 Variable expenses: Variable cost of goods sold Total variable expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Total fixed expenses Net operating income $ 0 0 0 0 $ Year 2 0 0 0 0 $ Year 3 0 0 0 0
Transcribed Image Text:Req 1A Req 1B Prepare an income statement for Year 1, Year 2, and Year 3. O'Brien Company Variable Costing Income Statement Year 1 Variable expenses: Variable cost of goods sold Total variable expenses Contribution margin Fixed expenses: Fixed manufacturing overhead Fixed selling and administrative Total fixed expenses Net operating income $ 0 0 0 0 $ Year 2 0 0 0 0 $ Year 3 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 Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $26 $ 14 $6 $3 $ 580,000 $ 180,000 During its first year of operations, O'Brien produced 97,000 units and sold 74,000 units. During its second year of operations, it produced 84,000 units and sold 102,000 units. In its third year, O'Brien produced 86,000 units and sold 81,000 units. The selling price of the company's product is $73 per unit. 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: 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): Complete this question by entering your answers in the tabs below.
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 $26 $ 14 $6 $3 $ 580,000 $ 180,000 During its first year of operations, O'Brien produced 97,000 units and sold 74,000 units. During its second year of operations, it produced 84,000 units and sold 102,000 units. In its third year, O'Brien produced 86,000 units and sold 81,000 units. The selling price of the company's product is $73 per unit. 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: 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): Complete this question by entering your answers in the tabs below.
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