Walsh Company manufactures and sells one product. The following information pert
ID: 2511254 • Letter: W
Question
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 24 Direct labor Variable manufcturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $320,000 60,000 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 $59 per unit. 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 1Explanation / Answer
1a.
1b: Income statement:
2a.
2b:
3.
Year 1 Year 2 Direct material 24.00 24.00 Direct labor 11.00 11.00 Variable manufacturing overhead 5.00 5.00 Unit product cost 40.00 40.00Related Questions
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