Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two 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 During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $52 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 2. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 3. Reconcile the difference between variable costing and absorption costing net operating income in Year 1. Req 1A Complete this question by entering your answers in the tabs below. Reg 1B $26 $ 17 $5 $4 $ 320,000 $ 100,000 Req 2A Req 2B Req 3 Reconcile the difference between variable costing and absorption costing net operating income in Year 1.
Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two 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 During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $52 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 2. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 3. Reconcile the difference between variable costing and absorption costing net operating income in Year 1. Req 1A Complete this question by entering your answers in the tabs below. Reg 1B $26 $ 17 $5 $4 $ 320,000 $ 100,000 Req 2A Req 2B Req 3 Reconcile the difference between variable costing and absorption costing net operating income in Year 1.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter7: Variable Costing For Management
analysis
Section: Chapter Questions
Problem 3E: Fresno Industries Inc. manufactures and sells high-quality camping tents. The company began...
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Transcribed Image Text:Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two 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
During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it
produced 40,000 units and sold 50,000 units. The selling price of the company's product is $52 per unit.
Required:
1. Assume the company uses variable costing:
a. Compute the unit product cost for Year 1 and Year 2.
b. Prepare an income statement for Year 1 and Year 2.
2. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1 and Year 2.
b. Prepare an income statement for Year 1 and Year 2.
3. Reconcile the difference between variable costing and absorption costing net operating income in Year 1.
Req 1A
Complete this question by entering your answers in the tabs below.
Req 1B
$ 26
$ 17
$5
$4
$ 320,000
$ 100,000
Reg 2A
Req 2B
Req 3
Reconcile the difference between variable costing and absorption costing net operating income in Year 1.
Note: Enter any losses or deductions as a negative value.
Variable costing net operating income (loss)
Add (deduct) fixed manufacturing overhead deferred in (released from) inventory under absorption
costing
Absorption costing net operating income (loss)
Year 1
Year 2
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