The following information applies to the questions displayed below.] O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 26 Direct labor $ 15 Variable manufacturing overhead $ 5 Variable selling and administrative $ 2 Fixed costs per year: Fixed manufacturing overhead $ 570,000 Fixed selling and administrative expenses $ 140,000 During its first year of operations, O’Brien produced 96,000 units and sold 77,000 units. During its second year of operations, it produced 85,000 units and sold 99,000 units. In its third year, O’Brien produced 87,000 units and sold 82,000 units. The selling price of the company’s product is $79 per unit. 3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first): Compute the unit product cost for Year 1, Year 2, and Year 3. Prepare an income statement for Year 1, Year 2, and Year 3 Complete this question by entering your answers in the tabs below. Req 3A Req 3B Prepare an income statement for Year 1, Year 2, and Year 3. Note: Round your intermediate calculations to 2 decimal places. O’Brien Company Absorption Costing Income Statement Year 1 Year 2 Year 3 Salesselected answer correct $6,083,000selected answer correct $7,821,000selected answer correct $6,478,000selected answer correct Cost of goods soldselected answer correct 3,999,380selected answer correct 4,624,290selected answer incorrect 4,309,100selected answer incorrect Gross marginselected answer correct 2,083,620 3,196,710 2,168,900 Selling and administrative expensesselected answer correct 294,000selected answer correct 338,000selected answer correct 304,000selected answer correct Net operating incomeselected answer correct $1,789,620 $2,858,710 $1,864,900 The two incorrect answers are bolded and I cannot figure out how they got these numbers. I am trying to understand how to get the correct numbers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Required information
Skip to question
[The following information applies to the questions displayed below.]
O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:
| Variable costs per unit: | |
|---|---|
| Manufacturing: | |
| Direct materials | $ 26 |
| Direct labor | $ 15 |
| Variable manufacturing overhead | $ 5 |
| Variable selling and administrative | $ 2 |
| Fixed costs per year: | |
| Fixed manufacturing overhead | $ 570,000 |
| Fixed selling and administrative expenses | $ 140,000 |
During its first year of operations, O’Brien produced 96,000 units and sold 77,000 units. During its second year of operations, it produced 85,000 units and sold 99,000 units. In its third year, O’Brien produced 87,000 units and sold 82,000 units. The selling price of the company’s product is $79 per unit.
3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first):
- Compute the unit product cost for Year 1, Year 2, and Year 3.
- Prepare an income statement for Year 1, Year 2, and Year 3
Complete this question by entering your answers in the tabs below.
- Req 3A
- Req 3B
Prepare an income statement for Year 1, Year 2, and Year 3.
Note: Round your intermediate calculations to 2 decimal places.
|
The two incorrect answers are bolded and I cannot figure out how they got these numbers. I am trying to understand how to get the correct numbers
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
In regard to the COGS for Years 2 - 19,000 units x 51.94 + 80,000 x 52.71 = 5,203,660
and
Year 3 - 5000 units x 52.71 + 77,000 x 52.55 = 4,309,900
How do you determine how to split out both years from the original sum
Y2 - 99,000 (19,000 + 80,000)
Y3 - 82,000 (5000 + 77,000)
by Bartleby Expert
