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12/21/12 4:55 PM Assignment Print View Page 1 of 17 http://ezto.mhecloud.mcgraw-hill.com/hm_accounting.tpx?todo=printview Score: 30 out of 30 points (100%) 1. award: 10 out of 10.00 points Nickelson Company manufactures and sells one product. The following information pertains to each of the companys first three years of operations: Variable costs per unit: Manufacturing: Direct materials $27 Direct labor $14 Variable manufacturing overhead $6 Variable selling and administrative $1 Fixed costs per year: Fixed manufacturing overhead $ 510,000 Fixed selling and administrative expenses $ 210,000 During its first year of operations Nickelson produced 60,000 units and sold 60,000 units. During its second year of operations it produced 75,000 units and sold 50,000 units. In its third year, Nickelson produced 40,000 units and sold 65,000 units. The selling price of the companys product is $60 per unit. 1 . Compute the companys break-even point in units sold. Break-even unit sales 60,000 units 2 . Assume the company uses variable costing: a . Compute the unit product cost for year 1, year 2, and year 3. (Omit the "$" sign in your response.) Year 1 Year 2 Year 3 Unit product cost $ 47 $ 47 $ 47 b . Prepare an income statement for year 1, year 2, and year 3. (Leave no cells blank - be certain to 12/21/12 4:55 PM Assignment Print View Page 2 of 17 http://ezto.mhecloud.mcgraw-hill.com/hm_accounting.tpx?todo=printview b . Prepare an income statement for year 1, year 2, and year 3. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the "$" sign in your response.) Variable Costing Income Statement Year 1 Year 2 Year 3 Sales $ 3,600,000 $ 3,000,000 $ 3,900,000 Variable expenses: Variable cost of goods sold 2,820,000 2,350,000 3,055,000 Variable selling and administrative expenses 60,000 50,000 65,000 Total variable expenses 2,880,000 2,400,000 3,120,000 Contribution margin 720,000 600,000 780,000 Fixed expenses: Fixed manufacturing overhead 510,000 510,000 510,000 Fixed selling and administrative expenses 210,000 210,000 210,000 Total fixed expenses 720,000 720,000 720,000 Net operating income (loss) $ $ -120,000 $ 60,000 3 . Assume the company uses absorption costing: a . Compute the unit product cost for year 1, year 2, and year 3. (Round your intermediate and final answers to 2 decimal places. Omit the "$" sign in your response.) Year 1 Year 2 Year 3 Unit product cost $ 55.50 $ 53.80 $ 59.75 b . Prepare an income statement for year 1, year 2, and year 3. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values except losses which should be indicated by a minus sign. Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.) Absorption Costing Income Statement Year 1 Year 2 Year 3 Sales $ 3,600,000 $ 3,000,000 $ 3,900,000 Cost of goods sold 3,330,000 2,690,000 3,735,000 12/21/12 4:55 PM... View Full Document

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