LoneStar Co. is a manufacturing company that produces only one product, cowboy boots, has provided the following data concerning its operations in 2019 and 2020: 2019 was the company's first year of operations. In 2019 the company produced 1,000 pairs of cowboy boots and sold 900 pairs. The company sold boots at $250 a pair. The company incurred the following costs in 2019: direct materials of $70 a pair, direct labor costs of $20 a pair, variable selling and administrative of $5 a pair, variable manufacturing overhead of $10 a pair, and fixed manufacturing overhead of $20,000. Lastly, they paid $50,000 for fixed selling and administrative expenses. In 2020, selling price and all costs remained the same except that direct material costs went up by $5 a pair. The company produced 2,000 pairs in 2020 and sold 1,500 pairs. LoneStar Co. uses FIFO inventory method (the oldest units are sold first). A. What is the unit product cost for 2019 and 2020 under variable costing? B. What is the unit product cost for 2019 and 2020 under absorption costing? C. What is the net operating income (NOI) for 2020 under variable costing? D. Under absorption costing, how much of 2019 FMOH cost was recognized in COGS in 2020? SHOW YOUR WORK. Briefly explain in words.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
need d) part only
LoneStar Co. is a manufacturing company that produces only one product, cowboy boots, has provided the following data
concerning its operations in 2019 and 2020:
2019 was the company's first year of operations. In 2019 the company produced 1,000 pairs of cowboy boots and sold 900 pairs.
The company sold boots at $250 a pair. The company incurred the following costs in 2019:
direct materials of $70 a pair,
direct labor costs of $20 a pair,
variable selling and administrative of $5 a pair,
variable manufacturing overhead of $10 a pair,
and fixed manufacturing overhead of $20,000.
Lastly, they paid $50,000 for fixed selling and administrative expenses.
In 2020, selling price and all costs remained the same except that direct material costs went up by $5 a pair. The company
produced 2,000 pairs in 2020 and sold 1,500 pairs. LoneStar Co. uses FIFO inventory method (the oldest units are sold first).
A. What is the unit product cost for 2019 and 2020 under variable costing?
B. What is the unit product cost for 2019 and 2020 under absorption costing?
C. What is the net operating income (NOI) for 2020 under variable costing?
D. Under absorption costing, how much of 2019 FMOH cost was recognized in COGS in 2020? SHOW YOUR WORK. Briefly
explain in words.
Transcribed Image Text:LoneStar Co. is a manufacturing company that produces only one product, cowboy boots, has provided the following data concerning its operations in 2019 and 2020: 2019 was the company's first year of operations. In 2019 the company produced 1,000 pairs of cowboy boots and sold 900 pairs. The company sold boots at $250 a pair. The company incurred the following costs in 2019: direct materials of $70 a pair, direct labor costs of $20 a pair, variable selling and administrative of $5 a pair, variable manufacturing overhead of $10 a pair, and fixed manufacturing overhead of $20,000. Lastly, they paid $50,000 for fixed selling and administrative expenses. In 2020, selling price and all costs remained the same except that direct material costs went up by $5 a pair. The company produced 2,000 pairs in 2020 and sold 1,500 pairs. LoneStar Co. uses FIFO inventory method (the oldest units are sold first). A. What is the unit product cost for 2019 and 2020 under variable costing? B. What is the unit product cost for 2019 and 2020 under absorption costing? C. What is the net operating income (NOI) for 2020 under variable costing? D. Under absorption costing, how much of 2019 FMOH cost was recognized in COGS in 2020? SHOW YOUR WORK. Briefly explain in words.
Expert Solution
steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Depletions and Amortizations
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
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education