operations: Variable costs per unit: Manufacturing: Direct materials Direct labor $26 $16 $3 $3 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead $ 510,000 Fixed selling and administrative expenses $ 170,000 During its first year of operations, O'Brien produced 90,000 units and sold 72,000 units. During its second year of operations, it produced 75,000 units and sold 88,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $73 per unit. 4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Compute the unit product cost for Year 1, Year 2, and Year 3. (Round your intermediate calculations and final answers to 2 decimal places.)

operations: Variable costs per unit: Manufacturing: Direct materials Direct labor $26 $16 $3 $3 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead $ 510,000 Fixed selling and administrative expenses $ 170,000 During its first year of operations, O'Brien produced 90,000 units and sold 72,000 units. During its second year of operations, it produced 75,000 units and sold 88,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $73 per unit. 4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first): a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. Compute the unit product cost for Year 1, Year 2, and Year 3. (Round your intermediate calculations and final answers to 2 decimal places.)

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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