Walsh Company manufactures and sells one product. The following information pertains to the company's first two years of operations: variable cost per unit manufacturing direct materials $30 direct labor $12 variable manufacturing overhead $5 variable selling and administrative $4; fixed costs per year, fixed manufacturing overhead $240,00 fixed selling and administrative expenses $60,000. During its first years 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 $51 per unit. Assume the company uses variable costing. Prepare an income statement for Year 1 and 2. Assume that the company uses absorption costing. Compute the unit product cost for year 1 and 2. Assume the company uses absorption costing. Prepare an income statement for Year 1 and 2. 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 the company's first two years of operations: variable cost per unit manufacturing direct materials $30 direct labor $12 variable manufacturing overhead $5 variable selling and administrative $4; fixed costs per year, fixed manufacturing overhead $240,00 fixed selling and administrative expenses $60,000. During its first years 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 $51 per unit. Assume the company uses variable costing. Prepare an income statement for Year 1 and 2. Assume that the company uses absorption costing. Compute the unit product cost for year 1 and 2. Assume the company uses absorption costing. Prepare an income statement for Year 1 and 2. Reconcile the difference between variable costing and absorption costing net operating income in Year 1.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter18: Pricing And Profitability Analysis
Section: Chapter Questions
Problem 3CE: Pattison Products, Inc., began operations in October and manufactured 40,000 units during the month...
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Transcribed Image Text:Walsh Company manufactures and sells one product. The following information pertains to the company's first two years of operations: variable cost per unit manufacturing direct materials $30 direct labor $12 variable manufacturing overhead $5
variable selling and administrative $4; fixed costs per year, fixed manufacturing overhead $240,00 fixed selling and administrative expenses $60,000. During its first years 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 $51 per unit. Assume the company uses variable costing. Prepare an income statement for Year 1 and 2. Assume that the
company uses absorption costing. Compute the unit product cost for year 1 and 2. Assume the company uses absorption costing. Prepare an income statement for Year 1 and 2. Reconcile the difference between variable costing and absorption
costing net operating income in Year 1.
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