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Walsh Company manufactures and sells one product. The following information pertains to each of the company's first two years 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 expenses es ist es s Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for Year 1 and Year 2. $ $ 45 24 15 4 3 $400,000 $ 70,000 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 $60 per unit. 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 Year 1 and Year 2. b. Prepare an income statement for Year 1 and Year 2. 3. Reconcile the difference between variable costing and absorption costing net operating income in Year 1.
Complete this question by entering your answers in the tabs below. Req 1A Req 1B Sales Variable expenses: Variable cost of goods sold Variable selling and administrative Req 2A Total variable expenses Contribution margin Fixed expenses: Assume the company uses variable costing. Prepare an income statement for Year 1 and Year 2. Walsh Company Income Statement Fixed selling and administrative expense Fixed manufacturing overhead Total fixed expenses Net operating income (loss) Req 2B X Answer is not complete. › ✓ ✓ ✓ ✓ $ Year 1 2,400,000 ✓1,840,000 560,000 Req 3 1,720,000 2,150,000 120,000✔ 150,000✔ 70,000 400,000 470,000 $ 90,000 Year 2 $ 3,000,000✔✔ $ 2,300,000 700,000 70,000✔ 400,000 470,000 230,000
Complete this question by entering your answers in the tabs below. Req 1A Reg 1B Req 2A Walsh Company Income Statement Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income (loss) Assume the company uses absorption costing. Prepare an income statement for Year 1 and Year 2. (Round your intermediate calculations to 2 decimal places.) Year 1 $ 2,400,000 2,040,000 360,000 X Answer is not complete. $ 190,000 170,000 Req 2B Year 2 $ 3,000,000 2,650,000 Req 3 220,000 $ (220,000)
Complete this question by entering your answers in the tabs below. Req 1A Req 1B X Answer is not complete. Req 2A Req 2B Req 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.) Variable costing net operating income (loss) Add: Fixed manufacturing overhead cost deferred in inventory under absorption costing Deduct: Fixed manufacturing overhead cost released from inventory under absorption costing Absorption costing net operating income (loss) $ Year 1 90,000 80,000 170,000 Year 2 230,000 (100,000) X 130,000