ALL COMPONENTS / QUESTIONS MUST BE FULLY ANSWERED -- DO NOT USE THE SIMILAR TEXT

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ALL COMPONENTS / QUESTIONS MUST BE FULLY ANSWERED -- DO NOT USE THE SIMILAR TEXTBOOK SOLUTIONS ALREADY IN PLACE

IF YOU ARE UNABLE TO ANSWER ALL COMPONENTS, PLEASE DO NOT ANSWER. INCOME STATEMENTS SHOULD BE IN THE MOST BASIC FORM. OPENING AND CLOSING INVENTORY, ETC., ARE NOT TO BE INCLUDED.  

Ciroc Company manufactures and sells one specific product. The following information pertains to each of Ciroc's first three years of operations:

Variable costs per unit:
Manufacturing:
Direct materials . . . . . . . . . . . . . . . . . . . . . . . . $ 32
Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 20
Variable manufacturing overhead . . . . . . . . . . $ 4
Variable selling and administrative . . . . . . . . . $ 3
Fixed costs per year:
Fixed manufacturing overhead . . . . . . . . . . . . $ 660,000
Fixed selling and administrative expenses . . . $ 120,000
During its first year of operations, Ciroc produced 100,000 units and sold 80,000 units. During its second year of operations, it produced 75,000 units and sold 90,000 units. In its third year, Ciroc produced 80,000 units and sold 75,000 units. The selling price of the company’s product is $ 75 per unit.

Required: (ALL COMPONENTS OF ALL 4 QUESTIONS MUST BE ANSWERED -- DO NOT USE THE TEXTBOOK SOLUTIONS ALREADY FOUND IN THIS BOOK)

1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest 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 -- Do not include OPENING and CLOSING inventory.

2. Assume the company uses variable costing and a LIFO inventory flow assumption (LIFO meanslast-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 -- Do not include OPENING and CLOSING inventory.

3. Assume the company uses absorption costing and a FIFO inventory flow assumption (FIFO meansfirst-in first-out. In other words, it assumes that the oldest 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 -- Do not include OPENING and CLOSING inventory.

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 an income statement for Year 1, Year 2, and Year 3 -- Do not include OPENING and CLOSING inventory.

Explanation / Answer

Solution 1a:

Solution 1b:

Solution 2a:

Solution 2b:

Solution 3a:

Solution 3b:

Solution 4a:

Solution 4b:

Computation of Unit Product Cost - Variable Costing Particulars Year 1 Year 2 Year 3 Unit Product Cost: Direct material $32.00 $32.00 $32.00 Direct Labor $20.00 $20.00 $20.00 Variable manufacturing overhead $4.00 $4.00 $4.00 Unit product cost - Variable costing $56.00 $56.00 $56.00

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