Walsh company manufactures and sells one product. The follwoing information pertains to each of t…

Walsh company manufactures and sells one product. The follwoing information pertains to each of the company’s first two years of operations: During its first years of operations, Walsh produced 50k units and sold 40k units. During its second year of operations, it produced 40k units and sold 50k units. The selling price of the company’s product is $60 per unit.

1. Assume the company uses variable costing

a. Compute the unit product cost for Year 1 and Year 2

b. Prepare an Income statment 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 statment for Year 1 and Year 2

Direct Materials                             $25

Direct Labor                                    $15

Variable Mfg Overhead                   $5

Variable selling and admin              $2

Fixed Mfg Overhead                       $250,000

Fixed Selling and Admin                  $80,000

Chapter Five Question 9E I am referring to Step 23 of 32. How did you come up with the cost per unit of $4? I see that in the original problem the Sell and Administrative expenses are $2. Please explain what formula you used to derive 4.

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