Solution 1a:
Computation of Unit Product Cost - Variable Costing | ||
Particulars | Year 1 | Year 2 |
Unit Product Cost: | ||
Direct material | $28.00 | $28.00 |
Direct Labor | $15.00 | $15.00 |
Variable manufacturing overhead | $3.00 | $3.00 |
Unit product cost | $46.00 | $46.00 |
Solution 1b:
Income Statement - Variable Costing - Walsh Company | |||
Particulars | Per Unit | Year 1 | Year 2 |
Sales | $52.00 | $2,080,000.00 | $2,600,000.00 |
Variable Costs: | |||
Variable manufacturing Costs | $46.00 | $1,840,000.00 | $2,300,000.00 |
Variable Selling and administrative expenses | $2.00 | $80,000.00 | $100,000.00 |
Total Variable Costs | $48.00 | $1,920,000.00 | $2,400,000.00 |
Contribution Margin | $4.00 | $160,000.00 | $200,000.00 |
Fixed Expenses: | |||
Fixed manufacturing overhead | $320,000.00 | $320,000.00 | |
Fixed Selling & Administrative Expenses | $60,000.00 | $60,000.00 | |
Net Operating Income | -$220,000.00 | -$180,000.00 |
Solution 2a:
Computation of Unit Product Cost - Absorption Costing | ||
Particulars | Year 1 | Year 2 |
Unit Product Cost: | ||
Direct material | $28.00 | $28.00 |
Direct Labor | $15.00 | $15.00 |
Variable manufacturing overhead | $3.00 | $3.00 |
Fixed
manufacturing overhead ($320,000 / Nos of unit produced) |
$6.40 | $8.00 |
Unit Product Cost | $52.40 | $54.00 |
Solution 2b:
Income Statement - Absorption Costing - Walsh Company | ||||
Particulars | Year 1 | Year 2 | ||
Details | Amount | Details | Amount | |
Sales | $2,080,000.00 | $2,600,000.00 | ||
Cost of Goods Sold: | ||||
Cost of goods produced | $2,620,000.00 | $2,160,000.00 | ||
Less: Ending Inventory | $524,000.00 | $0.00 | ||
Add: Opening Inventory | $0.00 | $2,096,000.00 | $524,000.00 | $2,684,000.00 |
Gross Profit | -$16,000.00 | -$84,000.00 | ||
Variable Selling & Administrative Expenses | $80,000.00 | $100,000.00 | ||
Fixed Selling & Administrative Expenses | $60,000.00 | $60,000.00 | ||
Net Operating Income | -$156,000.00 | -$244,000.00 |
Solution 3:
Reconciliation of Net Operating income under absorption costing & Variable Costing - Year 1 | |
Particulars | Amount |
Net Operating Income - Variable Costing | -$220,000.00 |
Add : Fixed manufacturing overhead deferred in inventory ($6.40*10000) | $64,000.00 |
Less: Fixed manufacturing overhead released in inventory | $0.00 |
Net Operating Income - Absorption Costing | -$156,000.00 |
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: 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...
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 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...
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...
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....
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,...
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...
Bracey Company manufactures and sells one product. The following information pertains to the company's first year of operations: Variable cost per unit: Direct materials Fixed costs per year: Direct labor Fixed manufacturing overhead Fixed selling and administrative expenses $ 241,500 $ 319,200 $ 52,000 The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Bracey produced 21,000 units and sold 19,900 units. The selling price of the company's...