Required information Skip to question [The following information applies to the questions displayed below.] O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 29 Direct labor $ 17 Variable manufacturing overhead $4 Variable selling and administrative $3 Fixed costs per year: Fixed manufacturing overhead $ 540,000 Fixed selling and administrative expenses $ 160,000 During its first year of operations, O'Brien produced 94,000 units and sold 72,000 units. During its second year of operations, it produced 78,000 units and sold 95,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $78 per unit. 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): Compute the unit product cost for Year 1, Year 2, and Year 3. Prepare an income statement for Year 1, Year 2, and Year 3.

Required information Skip to question [The following information applies to the questions displayed below.] O'Brien Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 29 Direct labor $ 17 Variable manufacturing overhead $4 Variable selling and administrative $3 Fixed costs per year: Fixed manufacturing overhead $ 540,000 Fixed selling and administrative expenses $ 160,000 During its first year of operations, O'Brien produced 94,000 units and sold 72,000 units. During its second year of operations, it produced 78,000 units and sold 95,000 units. In its third year, O'Brien produced 82,000 units and sold 77,000 units. The selling price of the company's product is $78 per unit. 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): Compute the unit product cost for Year 1, Year 2, and Year 3. Prepare an income statement for Year 1, Year 2, and Year 3.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter5: Process Costing

Section: Chapter Questions

Problem 2PB: The following product costs are available for Kellee Company on the production of eyeglass frames:...

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Income Statements under Absorption and Variable Costing In the coming year, Kalling Company expects to sell 28,700 units at 32 each. Kallings controller provided the following information for the coming year: Required: 1. Calculate the cost of one unit of product under absorption costing. 2. Calculate the cost of one unit of product under variable costing. 3. Calculate operating income under absorption costing for next year. 4. Calculate operating income under variable costing for next year.
The following product costs are available for Kellee Company on the production of eyeglass frames: direct materials, $32,125; direct labor, $23.50; manufacturing overhead, applied at 225% of direct labor cost; selling expenses, $22,225; and administrative expenses, $31,125. The direct labor hours worked for the month are 3,200 hours. A. What are the prime costs? B. What are the conversion costs? C. What is the total product cost? D. What is the total period cost? E. If 6.425 equivalent units are produced, what is the equivalent material cost per unit? F. What is the equivalent conversion cost per unit?
SmokeCity, Inc., manufactures barbeque smokers. Based on past experience, SmokeCity has found that its total annual overhead costs can be represented by the following formula: Overhead cost = 543,000 + 1.34X, where X equals number of smokers. Last year, SmokeCity produced 20,000 smokers. Actual overhead costs for the year were as expected. Required: 1. What is the driver for the overhead activity? 2. What is the total overhead cost incurred by SmokeCity last year? 3. What is the total fixed overhead cost incurred by SmokeCity last year? 4. What is the total variable overhead cost incurred by SmokeCity last year? 5. What is the overhead cost per unit produced? 6. What is the fixed overhead cost per unit? 7. What is the variable overhead cost per unit? 8. Recalculate Requirements 5, 6, and 7 for the following levels of production: (a) 19,500 units and (b) 21,600 units. (Round your answers to the nearest cent.) Explain this outcome.
Required information Skip to question [The following information applies to the questions displayed below.] O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 27 Direct labor $ 16 Variable manufacturing overhead $ 3 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 590,000 Fixed selling and administrative expenses $ 190,000 During its first year of operations, O’Brien produced 96,000 units and sold 73,000 units. During its second year of operations, it produced 84,000 units and sold 102,000 units. In its third year, O’Brien produced 80,000 units and sold 75,000 units. The selling price of the company’s product is $80 per unit. Required: 1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means…
Required information Skip to question [The following information applies to the questions displayed below.] O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 27 Direct labor $ 16 Variable manufacturing overhead $ 3 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 590,000 Fixed selling and administrative expenses $ 190,000 During its first year of operations, O’Brien produced 96,000 units and sold 73,000 units. During its second year of operations, it produced 84,000 units and sold 102,000 units. In its third year, O’Brien produced 80,000 units and sold 75,000 units. The selling price of the company’s product is $80 per unit. 4. Assume the company uses absorption costing and a LIFO inventory flow assumption (LIFO means last-in…
Required information Skip to question [The following information applies to the questions displayed below.] O’Brien Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 26 Direct labor $ 15 Variable manufacturing overhead $ 5 Variable selling and administrative $ 2 Fixed costs per year: Fixed manufacturing overhead $ 570,000 Fixed selling and administrative expenses $ 140,000 During its first year of operations, O’Brien produced 96,000 units and sold 77,000 units. During its second year of operations, it produced 85,000 units and sold 99,000 units. In its third year, O’Brien produced 87,000 units and sold 82,000 units. The selling price of the company’s product is $79 per unit. 3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it…
Required information Skip to question [The following information applies to the questions displayed below.] Kubin Company’s relevant range of production is 18,000 to 22,000 units. When it produces and sells 20,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 7.00 Direct labor $ 4.00 Variable manufacturing overhead $ 1.50 Fixed manufacturing overhead $ 5.00 Fixed selling expense $ 3.50 Fixed administrative expense $ 2.50 Sales commissions $ 1.00 Variable administrative expense $ 0.50 Required: For financial accounting purposes, what is the total product cost incurred to make 20,000 units? For financial accounting purposes, what is the total period cost incurred to sell 20,000 units? For financial accounting purposes, what is the total product cost incurred to make 22,000 units? For financial accounting purposes, what is the total period cost incurred to sell 18,000 units? Note: For all requirements, do…
Required information Skip to question [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $75 per unit in two geographic regions-the East and West regions. The following information pertains to the company's first year of operations in which it produced 57,000 units and sold 52,000 units. Variable costs per unit: Manufacturing: Direct materials $25 Direct labor $ 18 Variable manufacturing overhead $ 3 Variable selling and administrative $ 5 Fixed costs per year: Fixed manufacturing overhead $627,000 Fixed selling and administrative expense $ 645,000 The company sold 36,000 units in the East region and 16,000 units in the West region. It determined that $310,000 of its fixed selling and administrative expense is traceable to the West region, $ 260,000 is traceable to the East region, and the remaining $75,000 is a common fixed expense. The company will continue to incur the total amount of its fixed manufacturing…
Required information [The following information applies to the questions displayed below] Barnes Company reports the following for its product for its first year of operations Direct materials Direct labor s 35 per unit Variable overhead 5 25 per unit $10 per unit Fixed overhead Variable selling and administrative expenses $ 48,000 per year $3 per unit Fixed selling and administrative expenses $ 20,000 per year The company sells its product for $150 per unit. Compute gross profit using absorption costing assuming the company (al produces and sells 2,000 units and (b) produces 2,400 units and sells 2,000 units. Answer is not complete. (a) 2,000 Units Produced and 2.000 Units Sold (0)2,400 Unit Produced and 2,000 Units Sold Gross profit using absorption costing Sales Cost of goods sold Gross profit 00
Required information Skip to question [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $70 per unit in two geographic regions—the East and West regions. The following information pertains to the company’s first year of operations in which it produced 53,000 units and sold 48,000 units. Variable costs per unit: Manufacturing: Direct materials $ 21 Direct labor $ 10 Variable manufacturing overhead $ 2 Variable selling and administrative $ 4 Fixed costs per year: Fixed manufacturing overhead $ 1,060,000 Fixed selling and administrative expense $ 557,000 The company sold 36,000 units in the East region and 12,000 units in the West region. It determined that $270,000 of its fixed selling and administrative expense is traceable to the West region, $220,000 is traceable to the East region, and the remaining $67,000 is a common fixed expense. The company will continue to incur the…
Required information Skip to question [The following information applies to the questions displayed below.] Kubin Company’s relevant range of production is 30,000 to 35,000 units. When it produces and sells 32,500 units, its average costs per unit are as follows: Average Cost per Unit Direct materials $ 9.00 Direct labor $ 6.00 Variable manufacturing overhead $ 3.50 Fixed manufacturing overhead $ 7.00 Fixed selling expense $ 5.50 Fixed administrative expense $ 4.50 Sales commissions $ 3.00 Variable administrative expense $ 2.50 Required: 1. If 30,000 units are produced and sold, what is the variable cost per unit produced and sold? 2. If 35,000 units are produced and sold, what is the variable cost per unit produced and sold? 3. If 30,000 units are produced and sold, what is the total amount of variable cost related to the units produced and sold? 4. If 35,000 units are produced and sold, what is the total amount of variable cost related to the…
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