Messages 1 LTE 7 64 409 PM + Case 6-29 Group Projec.docx - Messages 1 LTE 7 64 4:09 PM Case 629 Group Project O'Brien

Messages 1 LTE 7 64 409 PM + Case 6-29 Group Projec.docx

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Messages 1 LTE 7 64% 4:09 PM + Case 6- 29 Group Project O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations. Variable Cost Per Unit: Unit: Manufacturing: Direct Materials Direct Labor $32 $20 $4 Variable Manufacturing Overhead Variable Selling & Administrative $3 $660,000 Fixed Cost Per Year: Fixed Manufacturing Overhead Fixed Selling & Administrative Expenses $120,000 During its first year of operations, O'Brien produced 100,000 units and sold 80,000 units. During its second year of operations, it produced 75,000 units and sold 90,000 units. In its third year, O'Brien produced 80,000 units and sold 75,000 units. The selling price of the company's product is $75 per unit. Romurod. Messages 1 LTE 1 63% 4:09 PM + Case 6- 29 Group Project 3. Assume the company uses an absorption costing and a FIFO inventory flow assumption (FIFO means
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Unformatted text preview: first in first-out. In other words, it assumes that the oldest units in inventory are sold first.) a. Compute the unit product cost for Year 1, Year 2, Year 3. Unit Cost of Production 56 56 56 Variable Cost of Production per Unit 6.6 8.8 8.25 Fixed Manufacturing Cost per Unit Unit Cost of Production 62.6 64.8 64.25 b. Prepare an income statement for Year 1, Year 2, Year 3. Sales 6000000 6750000 Cost of Goods Sold Beginning Stock 1252000 Messages 1 LTE 7 63% 4:09 PM + Case 6-29 Group Project Cost of Goods Produced 6260000 4860000 Cost of Goods Available for Sale 6260000 6112000 Less: Ending Stock 1252000 324000 Cost of Goods Sold 5,008,000 5,788,000 Gross Profit 992,000 962,000 Less: Selling Administrative Expense Variable Fixed 240,000 120,000 632,000 270,000 120,000 572,000 Net Income: Note: Ending stock for Year 2 = 5000*64.8 = $324000 Ending stock for year 3 = 10000*64.25 = $642500...
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