Walsh Company manufactures and sells one product. The following information pert
ID: 2527156 • 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:
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 $56 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.
Assume the company uses variable costing. Compute the unit product cost for year 1 and year 2.
Assume the company uses variable costing. Compute the unit product cost for year 1 and year 2.
Assume the company uses absorption costing. Compute the unit product cost for Year 1 and Year 2. (Round your answer to 2 decimal places.)
Variable costs per unit: Manufacturing: Direct materials $ 28 Direct labor $ 10 Variable manufacturing overhead $ 3 Variable selling and administrative $ 2 Fixed costs per year: Fixed manufacturing overhead $ 320,000 Fixed selling and administrative expenses $ 50,000Explanation / Answer
unit product cost a. Year 1 Year 2 unit product cost 41 41 notes Direct materials 28 direct labor 10 Variable manufacturing overhead 3 unit product cost 41 b. income statement year 1 year 2 Sales (40000*56);(50000*56) 2240000 2800000 Variable expenses Variable cost of goods sold 1640000 2050000 Variable selling and adm 80000 100000 total variable expense 1720000 2150000 Contribution margin 520000 650000 Fixed expense Fixed manufacturing overhead 320,000 320,000 Fixed selling & adm expense 50,000 50,000 total fixed expense 370,000 370,000 Net income 150,000 280,000 2) unit product cost a) Year 1 Year 2 unit product cost 47.4 49 notes year 1 year 2 Direct materials 28 28 direct labor 10 10 Variable manufacturing overhead 3 3 FMOH (320,000/50,000)….(320,000/40000) 6.4 8 unit product cost 47.4 49 b) income statement year 1 year 2 Sales 2240000 2800000 cost of goods sold 1896000 2434000 Gross margin 344000 366000 Selling and administrative expense 130,000 150,000 Net income 214,000 216000 cost of goods sold for year 2 (10,000*47.4+40000*49) 3) Reconcilaition year 1 year 2 Variable costing net operating income (loss) 150,000 280,000 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) 214,000 216,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.