90.2K

Verified Solution

Link Copied!

Prepare an income statement for Year $1,$ Year $2,$ and Year $3.$ Compute the unit product cost for Year $1,$ Year $2,$ and Year $3.$

Note: Round your intermediate calculations and final answers to $2$ decimal places. 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 $ $18$

Variable manufacturing overhead $ $6$

Variable selling and administrative $ $2$

Fixed costs per year:

Fixed manufacturing overhead $ $570,000$

Fixed selling and administrative expenses $ $130,000$

During its first year of operations, O'Brien produced $95,000$ units and sold $75,000$ units. During its second year of

operations, it produced $78,000$ units and sold $93,000$ units. In its third year, O'Brien produced $88,000$ units and sold

$83,000$ units. The selling price of the company's product is $$76$ per unit.

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 an income statement for Year $1,$ Year $2,$ and Year $3.$

Note: Round your intermediate calculations to $2$ decimal places.

PLEASE HELP WITH MISSING CELLS!

Show all imagesShow all images

Answer & Explanation Solved by verified expert

See Answer