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8 Mar 2018
EXERCISE 6-6 Variable and Absorption Costing Unit Product Costs and Income Statements [L06-1, L06-2] Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: 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 ............. $300,000 $190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit. Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.
EXERCISE 6-6 Variable and Absorption Costing Unit Product Costs and Income Statements [L06-1, L06-2] Lynch Company manufactures and sells a single product. The following costs were incurred during the company's first year of operations: 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 ............. $300,000 $190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company's product is $50 per unit. Required: 1. Assume that the company uses absorption costing: a. Compute the unit product cost. b. Prepare an income statement for the year. 2. Assume that the company uses variable costing: a. Compute the unit product cost. b. Prepare an income statement for the year.
Patrina SchowalterLv2
11 Mar 2018
Related questions
Lynch Company manufactures and sells a single product. Thefollowing costs were incurred during the companyâs first year ofoperations:
| Variable costs per unit: | ||
| Manufacturing: | ||
| Directmaterials | $ 10 | |
| Direct labor | $ 4 | |
| Variablemanufacturing overhead | $ 1 | |
| Variable sellingand administrative | $ 1 | |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $231,000 | |
| Fixed selling and administrative | $141,000 | |
During the year, the company produced 21,000 units and sold17,000 units. The selling price of the companyâs product is $40 perunit. |
| Required: |
| 1. | Assume that the company uses absorption costing: A.) Compute the unit product cost. B.) Prepare an income statement for the year. 2. Assume that the company uses variable costing: A.) Compute the unit product cost. B.) Prepare an income statement for the year. |
