ACNT 2302 Hello I need help with the following question: 6. value 16.66 points W

Question

ACNT 2302

Hello I need help with the following question:

6. value 16.66 points 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 $ 22 $11 $4 $3 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 320,000 $ 90,000 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 $52 per unit. Required: 1. Assume the company uses variable costing: a. Compute the unit product cost for year 1 and year 2. Year 1 Year 2 Unit product cost

Explanation / Answer

1 a) Year 1 Year 2 Unit product cost $                40.00 $                40.00 Explanation: Direct material $                22.00 $                22.00 Direct labor $                11.00 $                11.00 Variable overheads $                   4.00 $                   4.00 variable S&A $                   3.00 $                   3.00 Total unit product cost $                40.00 $                40.00 1b) Year 1 Year 2 Sales $ 2,080,000.00 $ 2,600,000.00 Variable Expenses: Direct material $      880,000.00 $ 1,100,000.00 Direct labor $      440,000.00 $      550,000.00 Variable overheads $      160,000.00 $      200,000.00 variable S&A $      120,000.00 $      150,000.00 Total variable expenses $ 1,600,000.00 $ 2,000,000.00 Contribution $      480,000.00 $      600,000.00 Fixed Expenses: Manufacturing overhead $      320,000.00 $      320,000.00 S&A Expenses $        90,000.00 $        90,000.00 Total Fixed expenses $      410,000.00 $      410,000.00 Net operating income $        70,000.00 $      190,000.00 2 a) Year 1 Year 2 Unit product cost $                43.40 $                45.00 Explanation: Direct material $                22.00 $                22.00 Direct labor $                11.00 $                11.00 Variable overheads $                   4.00 $                   4.00 Manufacturing overhead $                   6.40 $                   8.00 Total unit product cost $                43.40 $                45.00 Year 1 Year 2 Sales $ 2,080,000.00 $ 2,600,000.00 Less: Cost of goods sold $ 1,736,000.00 $ 2,234,000.00 Gross profit $      344,000.00 $      366,000.00 S&A Expenses $      210,000.00 $      240,000.00 Net operating income $      134,000.00 $      126,000.00 Year 1 Year 2 3 Variable cost net operating income $        70,000.00 $      190,000.00 Adjustment for manufacturing overhead $        64,000.00 $      (64,000.00) Absorption costing net operating income $      134,000.00 $      126,000.00

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