O G) eztanheducation.com hrTI tpa Walsh Company manufactures and sells one produ
ID: 2521927 • Letter: O
Question
O G) eztanheducation.com hrTI tpa 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 $ 29 s 12 S 3 $ 2 Variable selling and administrative Fixed costs per year S 320,000 Fixed selling and administrative expenses 90,000 Fixed manufacturing overhead 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 Year 1 Unit product cost b. Prepare an income statement for year 1 and year 2 Walsh Company Income Statement Year 1 Year 2 Variable expenses Total variable expenses Fixed expenses Total fixed expenses O Type here to searchExplanation / Answer
unit product cost a. Year 1 Year 2 unit product cost 44 44 notes Direct materials 29 direct labor 12 Variable manufacturing overhead 3 unit product cost 44 b. income statement year 1 year 2 Sales (40000*52);(50000*52) 2080000 2600000 Variable expenses Variable cost of goods sold 1760000 2200000 Variable selling and adm 80000 100000 total variable expense 1840000 2300000 Contribution margin 240000 300000 Fixed expense Fixed manufacturing overhead 320,000 320,000 Fixed selling & adm expense 90,000 90,000 total fixed expense 410,000 410,000 Net income -170,000 -110,000 2) unit product cost a) Year 1 Year 2 unit product cost 50.4 52 notes year 1 year 2 Direct materials 29 29 direct labor 12 12 Variable manufacturing overhead 3 3 FMOH (320,000/50,000)….(320,000/40000) 6.4 8 unit product cost 50.4 52 b) income statement year 1 year 2 Sales 2080000 2600000 cost of goods sold 2016000 2584000 Gross margin 64000 16000 Selling and administrative expense 170,000 190,000 Net income -106,000 -174000 cost of goods sold for year 2 (10,000*50.4+40000*52) 3) Reconcilaition year 1 year 2 Variable costing net operating income (loss) -170,000 -110,000 add:Deferrred fixed overhead in ending inventory (10000*6.4) 64,000 less:Fixed overhead realeased in beginning inventory(10000*6.4) -64,000 Absoption costing net operatin income (loss) -106,000 -174,000
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