EXERCISE 6-12 Varlable and Absorption Costing Unit Product Costs and Income StatementsLO1, L02, LO3)Fletcher Company manufactures and sells one product. The following information pertains to eachof the company's first two years of operations:Variable costs per unit:Manufacturing:Direct materialsDirect labor$20$12$4$3Variable manufacturing overhead-Variable selling and administrativeFixed costs peryearFixed manufacturing overheadFixed selling and administrative expenses$200,000$80,000During its first year of operations, Fletcher produced 50,000 units and sold 40,000 units. During itssecond year of operations, it produced 40,000 units and sold 50,000 units. The selling price of thecompany's product is $50 per unit.Required:Assume the company uses variable costing:Compute the unit product cost for year I and year 2.h.1.a.Prepare an income statement for year 1 and year 2.Assume the company uses absorption costing:Compute the unit product cost for year I and year 2.Prepare an income statement for year I and year 2.Explain the difference between variable costing and absorption costing net operating incomein year 1. Also, explain why the two net operating incomes differ in year2.

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Description: EXERCISE 6-12 Varlable and Absorption Costing Unit Product Costs and Income StatementsLO1, L02, LO3)Fletcher Company manufactures and sells one product. The following information pertains to eachof the company's first two years of operations:Variabl

Variable costing income statement The variable costing income statement is a statement prepared by…

Business

Accounting

Required: Assume the company uses variable costing: Compute the unit product cost for year I and year 2. h Prepare an income statement for year 1 and year 2. Assume the company uses absorption costing: Compute the unit product cost for year I and year 2. b Prepare an income statement for year I and year 2. 3. Explain the difference between variable costing and absorption costing net operating income in year I. Also, explain why the two net operating incomes differ in year 2. 1. a.

Required: Assume the company uses variable costing: Compute the unit product cost for year I and year 2. h Prepare an income statement for year 1 and year 2. Assume the company uses absorption costing: Compute the unit product cost for year I and year 2. b Prepare an income statement for year I and year 2. 3. Explain the difference between variable costing and absorption costing net operating income in year I. Also, explain why the two net operating incomes differ in year 2. 1. a.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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