Book1815.xlsx - Walsh Company 1 Assume the company uses variable costing a Compute the unit product cost for year 1 and year 2 Direct Materials Direct

Book1815.xlsx - Walsh Company 1 Assume the company uses...

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Walsh Company 1. Assume the company uses variable costing: a. Compute the unit product cost for year 1 and year 2. Year 1 Year 2 Direct Materials 27 27 Direct Labour 14 14 Variable Mfg Ohd. 5 5 46 46 b. Prepare an income statement for year 1 and year 2. Income Statement Year 1 Year 2 Sales 2200000 2750000 Variable expenses: Variable cost of goods sold 1840000 2300000 Variable selling and administrative 160000 200000 Total variable expenses 2000000 2500000 Contribution margin 200000 250000 Fixed expenses Fixed manufacturing overhead 240000 240000 Fixed selling and administrative expense 100000 100000 Total fixed expenses 340000 340000 Net operating income (loss) -140000 -90000 4x 40000 = 160000 ; 4 x 50000 = 200000 40000 x 55 = 2200000 ; 50000 x 55 = 2750000 46 x 40000 = 1840000 ; 46 x 50000 = 2300000 2. Assume the company uses absorption costing: a. Compute the unit product cost for year 1 and year 2. Year 1 Year 2 Direct Materials 27 27 Direct Labour 14 14 Variable Mfg Ohd. 5 5 Fixed Mfg Ohd. 4.8 6 50.8 52 Fixed Manufacturing overhead = 240000 / 50000 = 4.8
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  • Spring '12
  • CDG
  • Variable Selling, Walsh Company

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