question archive O'Brien Company manufactures and sells one product
O'Brien Company manufactures and sells one product
Subject:AccountingPrice: Bought3
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$26Direct labor$15Variable manufacturing overhead$4Variable selling and administrative$3Fixed costs per year: Fixed manufacturing overhead$580,000Fixed selling and administrative expenses$190,000
During its first year of operations, O'Brien produced 93,000 units and sold 74,000 units. During its second year of operations, it produced 82,000 units and sold 96,000 units. In its third year, O'Brien produced 89,000 units and sold 84,000 units. The selling price of the company's product is $71 per unit.
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 a income statement for Year 1, Year 2, and Year 3.
