+1-415-670-9189
info@expertsmind.com
Assume the company uses variable costing
Course:- Managerial Accounting
Reference No.:- EM13963057




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Managerial Accounting

ODonnell 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . $30
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18
Variable manufacturing overhead . . . . . . . . . . . . $6
Variable selling and administrative . . . . . . . . . . . $4
Fixed costs per year:
Fixed manufacturing overhead . . . . . . . . . . . . . . . $600,000
Fixed selling and administrative expenses . . . . . . $180,000
During its first year of operations, ODonnell produced 100,000 unitsand sold 80,000 units. 
During its second year of operations, it produced 75,000 units and sold 90,000 units. In its third year, ODonnell produced 80,000 units and sold 75,000 units. The selling price of the companys product is $70 per unit. 

Required: 

1. Assume the company uses variable 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):
a. Compute the unit product cost for year 1, year 2, and year 3. 
b. Prepare an income statement for year 1, year 2, and year 3. 

2. Assume the company uses variable costing and a LIFO inventory flowassumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first):
a. Compute the unit product cost for year 1, year 2, and year 3. 
b. Prepare an income statement for year 1, year 2, and year 3. 

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):
a. Compute the unit product cost for year 1, year 2, and year 3. 
b. Prepare an income statement for year 1, year 2, and year 3. 

4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO means last-in first-out. In other words, it assumes that the newest units in inventory are sold first):
a. Compute the unit product cost for year 1, year 2, and year 3. 
b. Prepare an income statement for year 1, year 2, and year 3. 




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Managerial Accounting) Materials
The president asks you to compare the alternatives on a total-annual-cost basis and on a per-unit basis for annual needs of 60,000 units. Which alternative seems more attrac
Do you believe that Qwest had established an effective system of internal control over financial reporting related to the presentation and disclosure of its nonrecurring reven
How do I determine the firms market value with this information? Debt = $7,000, Common stock ($1 par) = 458 and Retained earnings = $17,000. The firms bonds are currentl
Why would anyone take the trouble to study the history of management accounting? Identify the benefits and beneficiaries of such a study, examining critically the work alrea
The company treats all fringe benefits relating to direct labor as added direct labor cost and the remainder as part of manufacturing overhead. The allocation of Becky's wa
Assign the joint land and improvement costs to the lots using the value basis of allocation and compute the average cost per lot in the Canyon section and in the Hilltop secti
Processors Ltd. uses three different products - X, Y and Z to produce its major product line. Each kg of the raw material costs $2.00 for X, $3.75 for Y and $5.20 for Z.
Read Using Shareholder Value to Evaluate Strategic Choices - The basic principle of the article is that performance evaluation based on accounting measures alone is not suffic