During its first year of operations Walsh produced 50000 uni

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.

Variable costs per unit: Manufacturing: 21 12 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative 2 Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $240,000 $ 50,000

Solution

Calculate unit product cost under variable costing :

Prepare income statement under variable costing :

	Year 1	Year 2
Direct material	21	21
Direct labour	12	12
variable manufacturing overhead	3	3
Unit product cost	36	36