EXERCISE 4-9 Variable and Absorption Costing Unit Product Costs and Income Statements L04-1, LO4-2, L04-3 Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: 2. 3. Variable costs per unit: Manufacturing: a. b. Direct materials Direct labor..... Variable manufacturing overhead Variable selling and administrative. Fixed costs per year: Fixed manufacturing overhead.. Fixed selling and administrative expenses.. During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $60 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. Assume the company uses absorption costing: Compute the unit product cost for Year 1 and Year 2. Prepare an income statement for Year 1 and Year 2. $25 $15 $5 $2 $250,000 $80,000 qoll gniad no baand 000, Explain the difference between variable costing and absorption costing net operating income in Year 1. Also, explain why the two net operating incomes differ in Year 2.
EXERCISE 4-9 Variable and Absorption Costing Unit Product Costs and Income Statements L04-1, LO4-2, L04-3 Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: 2. 3. Variable costs per unit: Manufacturing: a. b. Direct materials Direct labor..... Variable manufacturing overhead Variable selling and administrative. Fixed costs per year: Fixed manufacturing overhead.. Fixed selling and administrative expenses.. During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of the company's product is $60 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. Assume the company uses absorption costing: Compute the unit product cost for Year 1 and Year 2. Prepare an income statement for Year 1 and Year 2. $25 $15 $5 $2 $250,000 $80,000 qoll gniad no baand 000, Explain the difference between variable costing and absorption costing net operating income in Year 1. Also, explain why the two net operating incomes differ in Year 2.
Chapter5: Process Costing
Section: Chapter Questions
Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...
Related questions
Question
Transcribed Image Text:EXERCISE 4-9 Variable and Absorption Costing Unit Product Costs and Income Statements L04-1,
LO4-2, L04-3
Walsh Company manufactures and sells one product. The following information pertains to each
of the company's first two years of operations:
od t
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......
$25
$15
$5
$2
$250,000
$80,000
d baimeingoe
During its first year of operations, Walsh produced 50,000 units and sold 40,000 units. During
its second year of operations, it produced 40,000 units and sold 50,000 units. The selling price of
the company's product is $60 per unit.
Required:
1. Assume the company uses variable costing:
a. Compute the unit product cost for Year 1 and Year
b. Prepare an income statement for Year 1 and Year 2.
2. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1 and Year 2.
b. Prepare an income statement for Year 1 and Year 2.
3. Explain the difference between variable costing and absorption costing net operating income
in Year 1. Also, explain why the two net operating incomes differ in Year 2.
HOST
Tunqol grises of
no baand 000,212 vd
R
6MFD PSS
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Accounting (Text Only)
Accounting
ISBN:
9781285743615
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Accounting (Text Only)
Accounting
ISBN:
9781285743615
Author:
Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:
Cengage Learning
Essentials of Business Analytics (MindTap Course …
Statistics
ISBN:
9781305627734
Author:
Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:
Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub