Question
In: Accounting
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
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 | $ | 12 |
| Direct labor | $ | 9 |
| Variable manufacturing overhead | $ | 2 |
| Variable selling and administrative | $ | 2 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 403,000 |
| Fixed selling and administrative | $ | 313,000 |
During the year, the company produced 31,000 units and sold 26,000 units. The selling price of the company’s product is $55 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.
Prepare an income statement for the year. Assume that the company uses absorption costing.
|
|||||||||||||||
2. Assume that the company uses variable costing:
a. Compute the unit product cost.
b. Prepare an income statement for the year
|
||||||||||||||||||||||||||||||||||||||||||||||
Solutions
Expert Solution
Answer of Part 1–a:
Unit Product Cost = Direct Material + Direct Labor + Variable
Manufacturing Overhead +Fixed Manufacturing Overhead
Unit Product Cost = $12 + $9 + $2 + ($403,000 / 31,000)
Unit Product Cost = $12 + $9 + $2 + $13
Unit Product Cost = $36
Answer of Part 2-a:
Unit Product Cost = Direct Material + Direct Labor + Variable
Manufacturing Overhead
Unit Product Cost = $12 + $9 + $2
Unit Product Cost = $23
ekkarill92 answered 2 years agoRelated Solutions
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
Lynch Company manufactures and sells a single product. The
following costs were incurred during the company’s first year of
operations:
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
$
11
Direct labor
$
5
Variable manufacturing overhead
$
2
Variable selling and administrative
$
2
Fixed costs per year:
Fixed manufacturing overhead
$
350,000
Fixed selling and administrative
$
260,000
During...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
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
$
11
Direct labor
$
8
Variable manufacturing overhead
$
1
Variable selling and administrative
$
1
Fixed costs per year:
Fixed manufacturing overhead
$
420,000
Fixed selling and administrative
$
330,000
During the year, the company produced 30,000 units and sold
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Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
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
$
11
Direct
labor
$
5
Variable
manufacturing overhead
$
2
Variable selling
and administrative
$
2
Fixed costs per
year:
Fixed
manufacturing overhead
$
350,000
Fixed selling
and administrative
$
260,000
During the year, the company produced 35,000 units and sold
25,000 units. The selling price of the company’s product is $46...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
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
$
13
Direct
labor
$
5
Variable
manufacturing overhead
$
1
Variable selling
and administrative
$
1
Fixed costs per
year:
Fixed
manufacturing overhead
$
320,000
Fixed selling
and administrative expenses
$
230,000
During the year, the
company produced 32,000 units and sold 17,000 units. The selling
price of the company’s product is...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
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 $ 11 Direct labor $ 8 Variable manufacturing overhead $ 1
Variable selling and administrative $ 1 Fixed costs per year: Fixed
manufacturing overhead $ 420,000 Fixed selling and administrative $
330,000 During the year, the company produced 30,000 units and sold
25,000 units. The selling price of the company’s product is $54...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
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
$
11
Direct labor
$
5
Variable manufacturing overhead
$
2
Variable selling and administrative
$
2
Fixed costs per year:
Fixed manufacturing overhead
$
264,000
Fixed selling and administrative
$
174,000
During the year, the company produced 22,000 units and sold
18,000 units. The selling price of the company’s product is $45...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
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
$
14
Direct
labor
$
5
Variable
manufacturing overhead
$
1
Variable selling
and administrative
$
1
Fixed costs per
year:
Fixed
manufacturing overhead
$
264,000
Fixed selling
and administrative
$
174,000
During the year, the
company produced 33,000 units and sold 15,000 units. The selling
price of the company’s product is $52...
Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
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 $ 14 Direct labor $ 8 Variable manufacturing overhead $ 2
Variable selling and administrative $ 2 Fixed costs per year: Fixed
manufacturing overhead $ 250,000 Fixed selling and administrative
expenses $ 160,000 During the year, the company produced 25,000
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Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
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
$
10
Direct labor
$
4
Variable manufacturing overhead
$
1
Variable selling and administrative
$
1
Fixed costs per year:
Fixed manufacturing overhead
$
231,000
Fixed selling and administrative
$
141,000
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Lynch Company manufactures and sells a single product. The following costs were incurred during the company’s...
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Variable costs
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Manufacturing:
Direct
materials
$ 13
Direct
labor
$ 7
Variable
manufacturing overhead
$ 1
Variable selling
and administrative
$ 1
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Fixed
manufacturing overhead
$
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Fixed selling
and administrative
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price of the company’s product is $48 per unit.
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