Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations:
Variable costs per unit:
Manufacturing:
Direct materials $ 11
Direct labor $ 4
Variable manufacturing overhead $ 1
Variable selling and administrative $ 1
Fixed costs per year:
Fixed manufacturing overhead $ 308,000
Fixed selling and administrative $ 218,000
During the year, the company produced 28,000 units and sold 24,000 units. The selling price of the company’s product is $41 per unit. Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.
Requirement 1-a
Per Unit | |
Unit product cost as per absorption costing | $ 27.00 |
Working
Unit product cost as per absorption costing | |
Per Unit | |
Direct material | $ 11.00 |
Direct labor | $ 4.00 |
Variable manufacturing overhead | $ 1.00 |
Fixed manufacturing overhead | $ 11.00 |
Unit product cost as per absorption costing | $ 27.00 |
Requirement 1-b
Absorption costing income statement | |
Sales | $ 984,000.00 |
Cost of goods sold | $ 648,000.00 |
Gross profit | $ 336,000.00 |
Operating expenses | |
Selling and administrative expenses | $ 242,000.00 |
Net income | $ 94,000.00 |
Requirement 2-a
Unit product cost as per Variable costing | $ 16.00 |
Working
Per Unit | |
Direct material | $ 11.00 |
Direct labor | $ 4.00 |
Variable manufacturing overhead | $ 1.00 |
Unit product cost as per Variable costing | $ 16.00 |
.Requirement 2-b
Lynch Company | ||
Variable Costing Income Statement | ||
Sales | $ 984,000.00 | |
Less: Variable Cost | ||
Direct material | $ 264,000.00 | |
Direct labor | $ 96,000.00 | |
Variable manufacturing overhead | $ 24,000.00 | |
Variable Selling expenses | $ 24,000.00 | |
Total variable cost | $ 408,000.00 | |
Contribution Margin | $ 576,000.00 | |
Fixed costs: | ||
Fixed manufacturing Overheads | $ 308,000.00 | |
Fixed selling & administrative expenses | $ 218,000.00 | |
Total fixed cost | $ 526,000.00 | |
Income from operations | $ 50,000.00 |
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 13 Direct labor $ 7 Variable manufacturing overhead $ 1 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 288,000 Fixed selling and administrative $ 198,000 During the year, the company produced 24,000 units and sold 20,000 units. The selling price of the company’s product is $48...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year 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 httी $308,000 $218,000 During the year, the company produced 28,000 units and sold 24,000 units. The selling price of the company's product is $41 per unit. Required: 1. Assume that the company uses...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 12 Direct labor $ 3 Variable manufacturing overhead $ 1 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 324,000 Fixed selling and administrative $ 234,000 During the year, the company produced 27,000 units and sold 23,000 units. The selling price of the company’s product is $42...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 14 Direct labor $ 3 Variable manufacturing overhead $ 1 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 330,000 Fixed selling and administrative $ 240,000 During the year, the company produced 33,000 units and sold 24,000 units. The selling price of the company’s product is $44...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 10 Direct labor $ 4 Variable manufacturing overhead $ 1 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 231,000 Fixed selling and administrative $ 141,000 During the year, the company produced 21,000 units and sold 17,000 units. The selling price of the company’s product...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 10 Direct labor $ 4 Variable manufacturing overhead $ 2 Variable selling and administrative $ 2 Fixed costs per year: Fixed manufacturing overhead $ 374,000 Fixed selling and administrative $ 284,000 During the year, the company produced 34,000 units and sold 26,000 units. The selling price of the company’s product is $44...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 11 Direct labor $ 8 Variable manufacturing overhead $ 1 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 420,000 Fixed selling and administrative $ 330,000 During the year, the company produced 30,000 units and sold 25,000 units. The selling price of the company’s product is $54...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 14 Direct labor $ 8 Variable manufacturing overhead $ 2 Variable selling and administrative $ 2 Fixed costs per year: Fixed manufacturing overhead $ 250,000 Fixed selling and administrative $ 160,000 During the year, the company produced 25,000 units and sold 21,000 units. The selling price of the company’s product is $47...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $12 Direct labor $9 Variable manufacturing overhead $2 Variable selling and administrative $2 Fixed costs per year: Fixed manufacturing overhead $403000 Fixed selling and administrative $313000 During the year, the company produced 31,000 units and sold 26,000 units. The selling price of the company’s product is $55 per unit. Assume that the company...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 10 Direct labor $ 7 Variable manufacturing overhead $ 3 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 380,000 Fixed selling and administrative $ 290,000 During the year, the company produced 38,000 units and sold 18,000 units. The selling price of the company’s product is $61...