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Exercise 5-9 Variable and Absorption Costing Unit Product Costs and Income Statements [LO5-1, LO5-2, LO5-3] 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 Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses %24 %2$ %24 %24 26 11 6 5 $ 240,000 $ 70,000 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 pe Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for year 1 and year 2.

Exercise 5-9 Variable and Absorption Costing Unit Product Costs and Income Statements [LO5-1, LO5-2, LO5-3] 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 Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses %24 %2$ %24 %24 26 11 6 5 $ 240,000 $ 70,000 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 pe Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for year 1 and year 2.

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter3: Cost Behavior And Cost Forecasting
Section: Chapter Questions
Problem 54E: Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects...
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Exercise 5-9 Variable and Absorption Costing Unit Product Costs and Income Statements [LO5-1, LO5-2, LO5-3] 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 26 $ $ 11 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 240,000 $ 70,000 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. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for year 1 and year 2. Year 1 Year 2 Unit product cost $ 43 $ 43
Transcribed Image Text:Exercise 5-9 Variable and Absorption Costing Unit Product Costs and Income Statements [LO5-1, LO5-2, LO5-3] 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 26 $ $ 11 Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 240,000 $ 70,000 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. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for year 1 and year 2. Year 1 Year 2 Unit product cost $ 43 $ 43
2. Assume the company uses absorption costing: a. Compute the unit product cost for year 1 and year 2. (Round your answers to 2 decimal places.) Year 1 Year 2 Unit product cost b. Prepare an income statement for year 1 and year 2. (Round your intermediate calculations to 2 decimal places) Walsh Company Income Statement Year 1 Year 2 Net operating income (loss) 3. Reconcile the difference between variable costing and absorption costing net operating income in year 1 and year 2. Year 1 Year 2 Variable costing net operating income (loss) Absorption costing net operating income (loss)
Transcribed Image Text:2. Assume the company uses absorption costing: a. Compute the unit product cost for year 1 and year 2. (Round your answers to 2 decimal places.) Year 1 Year 2 Unit product cost b. Prepare an income statement for year 1 and year 2. (Round your intermediate calculations to 2 decimal places) Walsh Company Income Statement Year 1 Year 2 Net operating income (loss) 3. Reconcile the difference between variable costing and absorption costing net operating income in year 1 and year 2. Year 1 Year 2 Variable costing net operating income (loss) Absorption costing net operating income (loss)
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