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 $ 22 Direct labor $ 18 Variable manufacturing overhead $
2 Variable selling and administrative $ 1 Fixed costs per year:
Fixed manufacturing overhead $ 400,000 Fixed selling and
administrative expenses $ 90,000 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
$87 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.
Answer 1-a.
Year 1:
Unit Product Cost = Direct Materials + Direct Labor + Variable
Manufacturing Overhead
Unit Product Cost = $22.00 + $18.00 + $2.00
Unit Product Cost = $42.00
Year 2:
Unit Product Cost = Direct Materials + Direct Labor + Variable
Manufacturing Overhead
Unit Product Cost = $22.00 + $18.00 + $2.00
Unit Product Cost = $42.00
Answer 1-b.
Year 1:
Sales = 40,000 * $87.00
Sales = $3,480,000
Variable cost of goods sold = 40,000 * $42.00
Variable cost of goods sold = $1,680,000
Variable selling and administrative expenses = 40,000 *
$1.00
Variable selling and administrative expenses = $40,000
Year 2:
Sales = 50,000 * $87.00
Sales = $4,350,000
Variable cost of goods sold = 50,000 * $42.00
Variable cost of goods sold = $2,100,000
Variable selling and administrative expenses = 50,000 *
$1.00
Variable selling and administrative expenses = $50,000
Answer 2-a.
Year 1:
Unit Product Cost = Direct Materials + Direct Labor + Variable
Manufacturing Overhead + Fixed Manufacturing Overhead
Unit Product Cost = $22.00 + $18.00 + $2.00 + $400,000/50,000
Unit Product Cost = $50.00
Year 2:
Unit Product Cost = Direct Materials + Direct Labor + Variable
Manufacturing Overhead + Fixed Manufacturing Overhead
Unit Product Cost = $22.00 + $18.00 + $2.00 + $400,000/40,000
Unit Product Cost = $52.00
Answer 2-b.
Year 1:
Sales = 40,000 * $87.00
Sales = $3,480,000
Cost of goods sold = 40,000 * $50.00
Cost of goods sold = $2,000,000
Selling and administrative expenses = 40,000 * $1.00 +
$90,000
Selling and administrative expenses = $130,000
Year 2:
Sales = 50,000 * $87.00
Sales = $4,350,000
Cost of goods sold = 10,000 * $50.00 + 40,000 * $52.00
Cost of goods sold = $2,580,000
Selling and administrative expenses = 50,000 * $1.00 +
$90,000
Selling and administrative expenses = $140,000
Answer 3.
Walsh Company manufactures and sells one product. The following information pertains to each of the company’s...
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 $54 per unit.
Required:
1. Assume the company uses variable costing:
a. Compute the unit product cost for Year 1 and Year 2....
7
Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: ve Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead $320,000 Fixed selling and administrative expenses $ 60.000 SER 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...
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 $ $ $ $ 27 13 4 3 $320,000 $ 90,000 During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations,...
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 $ $ $ 21 14 5 4 $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...
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
$
21
Direct labor
$
16
Variable manufacturing overhead
$
3
Variable selling and administrative
$
2
Fixed costs per year:
Fixed manufacturing overhead
$
240,000
Fixed selling and administrative expenses
$
100,000
During its first year of operations, Walsh produced 50,000 units
and sold 40,000 units. During its second year of...
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 unitt Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year! Fixed manufacturing overhead Fixed selling and administrative expenses $320,000 $ 60,000 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....
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 28 Direct labor 15 Variable manufacturing overhead Variable selling and administrative Fixed costs per year Fixed manufacturing overhead Fixed selling and administrative expenses 6 5 $320,000 60,000 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...
Saved 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 $ 240,000 $ 60,000 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...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: A A 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 A A $264,000 $174,000 During the year, the company produced 22,000 units and sold 18,000 units. The selling price of the company's product is $45 per unit. Required: 1. Assume that...
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 $ $ $ $ 25 18 5 4 $320,000 $ 70,000 During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations,...