Managerial Accounting: P6-17 Nickelson Company manufactures and sells one product

Managerial Accounting

P6-17 Variable and Absorption Costing Unit Product Costs and Income Statement
Nickelson 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 25.00
Direct labor 16.00
Variable manufacturing overhead 5.00
Variable selling and administrative 2.00
Fixed costs per year:
Fixed manufacturing overhead 300,000
Fixed selling and administrative expenses 180,000

During its first year of operations Nickelson produced 60,000 units and sold 60,000 units. During its second year of operations it produced 75,000 units and sold 50,000 units. In its third year, Nickelson produced 40,000 units and sold 65,000 units. The selling price of the company's product is $56 per unit.

1. Computer the company's break-even point in units sold
2. Assume the company uses variable costing:
a. Compute the unit product cost for year 1, year 2 and year 3. (Omit the $ sign in your response).
b. Prepare an income statement for year 1, year 2 and yer 3. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the $ sign in your response.
3. Assume the company uses absorption costing:
a. Compute the unit product cost for year 1, year 2 and year 3. (Round your intermediate and final answers to 2 decimal places. Omit the $ sign in your response).
b. Prepare an income statement for year 1, year 2 and yer 3. (Leave no cells blank - be certain to enter "0" wherever required. Input all amounts as positive values except losses which should be indicated by a minus sign. Omit the $ sign in your response.
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