i need help with accounting 2302 homework

Question

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	$ 28
Direct labor	$ 15
Variable manufacturing overhead	$ 6
Variable selling and administrative	$ 5
Fixed costs per year:
Fixed manufacturing overhead	$ 320,000
Fixed selling and administrative expenses	$ 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 $55 per unit.

Required:

1. Assume the company uses variable costing:
2. Compute the unit product cost for Year 1 and Year 2.
3. Prepare an income statement for Year 1 and Year 2.
4. Assume the company uses absorption costing:
5. Compute the unit product cost for Year 1 and Year 2.
6. Prepare an income statement for Year 1 and Year 2.
7. Reconcile the difference between variable costing and absorption costing net operating income in Year 1 and Year 2.

Answer 1

1. Variable
2. Unit Product Cost Year 1 = $ 49 and Year 2 = $49
3. Net Income (Loss): Year 1 = ($370,000) and Year 2 = ($360,000)
4. Absorption
5. Unit Product Cost Year 1 = $55 and Year 2 = $57
6. Net Income (Loss): Year 1 = ($306,000) and Year 2 = ($440,000)
7. Year 1 Variable Net Loss compared to Year 1 Net Loss Absorption Cost is a difference of $64,000 ($370,000-$306,000) and Year 2 Variable Net Loss compared to Year 2 Net Loss Absorption Cost is a difference of $80,000 ($360,000-$440,000)

The reason for the loss is because of their high cost of creating the product and not selling the product for a significant amount to offset the cost of production.

I hope this helps. I would use these figures as check figures to make sure you calculated correctly.