Chapter 6, Problem 25P

To determine

To compute: The unit production cost in each year under absorption costing method. And segregate the variable and fixed cost.

To determine

Reconcile the variable costing and absorption costing net operating income for each year.

To determine

To explain: With the help of absorption costing statement given in question the operating income of year 2 is higher than the operating income of year 1 as the sold units are less than the year 1.

To determine

To explain: The reason why company suffered a loss in year 3 as it has profit in year 1 and the number of unit sold is same in year 1 and in year 3.

To determine

To explain: If company uses lean production, how operation is differed in year 2 and in year 3 and the ending inventory is zero.

To determine

To compute: The operating income of the company under absorption costing with the help of lean accounting.