50.1K

Verified Solution

Link Copied!

Exercise 6-9 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements (L06-1, LO6-2, LO6-3) Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years of operations: ook ht Yint Variable coste per units Manufacturing Direct materials Direct labor 5.11 Variable manufacturing overhead 3 Variable selling and administrative $ 2 Tixed coats per year Tixed manufacturing overhead .800.000 Tixed selling and administrative expenses 650.000 During its first year of operations, Walsh produced 50,000 units and sold 40.000 units. During its second year of operations, It produced 40,000 units and sold 50,000 units. The selling price of the company's product is $55 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2 b. Prepare an income statement for Year 1 and Year 2 2. Assume the company uses absorption costing: a. Compute the unit product cost for Yoart and Year 2. b. Prepare an Income statement for Year 1 and Year 2 3. Reconcile the difference between variable costing and absorption costing not operating incomd in Year 1 Complete this question by entering your answers in the tabs below. Reg 1A Req 2B Req 18 Reg 2A Reg 3 Assume the company uses absorption costing. Prepare an income statement for Year 1 and Year 2. (Round your intermediate calculations to 2 decimal places) Walsh Company Income Statement Yoar 1 Year 2 Sales $ 2.200,000 $2,750,000 Cost of goods sold 1.920,000 Gross margin 280,000 Selling and administrative expenses 170,000 190,000 Net operating income (loss) S 110,000 $ (190,000) Complete this question by entering your answers in the tabs below. Reg 1A Reg 1B Reg 2A Reg 28 Reg 3 Reconcile the difference between variable costing and absorption costing net operating Income In Year 1. (Enter any losses or deductions as a negative value.) Year 1 Year 2 Variable costing net operating income (loss) Add (deduct) fored manufacturing overhead deferred in (released from) inventory under absorption cosing Absorption costing net operating income foss) nes

Answer & Explanation Solved by verified expert

See Answer