FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Related questions
Question
A manufacturing company, Exeter Corporation produces a single product with a selling price of
$74 per unit, the following data regarding it’s operation in the current years is available :
Units in Beginning Inventory in Year 1 0 units
Units produced in Year 1 23,000 units
Units sold in Year 1 19, 500 units
Units produced in Year 2 20,000 units
Units sold in Year 2 22,000 units
Variable costs of the company during Year 1 operations :
DM $33
DL $11
MOH $3.5
Selling & Admin $8.70
Fixed costs of the company during Year 1 operations :
Selling & Admin expenses $85,000
Manufacturing
Variable costs of the company during Year 2 operations :
DM $33.75
DL $12
MOH $3.5
Selling & Admin $9
Fixed costs of the company during Year 2 operations :
Selling & Admin expenses $85,000
Manufacturing Overheads $250,000
Required:
a. Calculate the product cost per unit for Year 1 and Year 2, under the Variable Costing System.
b. Calculate the product cost per unit for Year 1 and Year 2, under the Absorption Costing System.
c. Prepare the Income Statements for Year 1 and Year 2 , using the variable costing system.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by stepSolved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Required information [The following information applies to the questions displayed below.] O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: $ Direct materials Direct labor $ $ Variable manufacturing overhead Variable selling and administrative $ Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $560,000 $100,000 During its first year of operations, O'Brien produced 98,000 units and sold 75,000 units. During its second year of operations, it produced 80,000 units and sold 98,000 units. In its third year, O'Brien produced 90,000 units and sold 85,000 units. The selling price of the company's product is $74 per unit. 2. Assume the company uses variable 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.…arrow_forwardRequired information [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $76 per unit in two geographic regions-East and West. The following information pertains to the company's first year of operations in which it produced 58,000 units and sold 54,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense 2. What is the unit product cost under absorption costing? The company sold 40,000 units in the East region and 14,000 units in the West region. It determined $320,000 of its fixed selling and administrative expense is traceable to the West region, $270,000 is traceable to the East region, and the remaining $50,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead…arrow_forwardIda Company produces a handcrafted musical instrument called a gamelan that is similar to a xylophone. The gamelans are sold for $845, Selected data for the company's operations last year follow: Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs : Fixed manufacturing overhead Fixed selling and administrative 19,000 16,000 3,000 $ 260 $ 340 $ 57 $ 22 $ 910,000 $ 930,000 Required: 1. Assume that the company uses absorption costing. Compute the unit product cost for one gamelan. (Round your intermediate calculations and final answer to the nearest whole dollar amount.) 2. Assume that the company uses variable costing. Compute the unit product cost for one gahelan. 1. Absorption costing unit product cost 2. Variable costing unit product costarrow_forward
- Whitman Company Income Statement Sales (38,000 units $41.60 per unit) Cost of goods sold (38,000 units x $23 per unit) Gross margin Selling and administrative expenses $ 1,580,800 874,000 706,800 475,000 Net operating income $ 231,800 The company's selling and administrative expenses consist of $285,000 per year in fixed expenses and $5 per unit sold in variab expenses. The $23 unit product cost given above is computed as follows: Direct materials Direct labor Variable manufacturing overhead $ 11 4 4 Fixed manufacturing overhead ($216,000 + 54,000 units) Absorption costing unit product cost 4 $ 23 Required: 1. Redo the company's Income statement in the contribution format using variable costing. 2. Reconcile any difference between the net operating Income on your variable costing Income statement and the net operating Income on the absorption costing Income statement above. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Redo the company's…arrow_forwardRequired information [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $71 per unit in two geographic regions-East and West. The following information pertains to the company's first year of operations in which it produced 54,000 units and sold 49,000 units. Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expense $ 22 $ 12 $3 $5 The company sold 36,000 units in the East region and 13,000 units in the West region. It determined that $280,000 of its fixed selling and administrative expense is traceable to the West region, $230,000 is traceable to the East region, and the remaining $76,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing overhead costs as long as it continues to produce…arrow_forwardAnswer all the requirement, answer in text form please (without image)arrow_forward
- A company selling a single product with the cost of producing and selling a single unit of this product at the company's normal activity level of 60000 units per year. Direct material $5.10 Direct labor $3.80 Variable management overhead $1.00 Fixed manufacturing overhead $4.70 Variable selling and administrative expenses $1.50 Fixed selling and administrative expense $2.40 Capacity per year 75000 units Normal selling price per unit $21.00 Question: an order was received as a mail-order house for 15000 units at $14.00 per unit. This order would not affect the company's regular sales or the companies total fixed cost. What is the financial advantage or disadvantage of accept this special order? Thank you,arrow_forwardPlease help mearrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education