Question

Not sure if my calculations are correct though.

Required Information [The following information applies to the questions displayed below] O'Brien Company manufactures and sellis 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 $550,000 $130,000 During its first year of operations, O'Brien produced 93,000 units and sold 75,000 units. During its second year of operations, it produced 78,000 units and sold 91,000 units. In its third year, O'Brien produced 86.000 units and sold 81,000 units. The selling price of the company's product is $80 per unit.

Answer 1

Required: 1a Unit product cost Year 1 Year 2 Year 3 28 28 18 28 18 18 Direct material Direct labor Variable manufacturing overhead Variable costing unit product cost 51.00 51.00 51.000 Required: 1b O'Brien Company Variable Costing Income Statement Year 1 Sales 6000000 Variable expenses: Variable cost of goods sold 3825000 Variable selling and administrative 225000 Year 2 7280000 Year 3 6480000 4641000 273000 4131000 243000 4050000 1950000 4914000 2366000 4374000 2106000 Total variable expenses Contribution margin Fixed expenses: Fixed selling and administrative Fixed manufacturing overhead 130000 550000 130000 550000 130000 550000 Total fixed expenses Net operating income 680000 1270000 680000 1686000 6800001 1426000