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Get college assignment help at uniessay writers Annuity with change in interest rate. Jan Green established a savings account for her son’s college education by making annual deposits of $6,000 at the beginning of each of six years to a savings account paying 8%. At the end of the sixth year, the account balance was transferred to a bank paying 10%, and annual deposits of $6,000 were made at the end of each year from the seventh through the tenth years. What was the account balance at the end of the tenth year?

PRICING BOOK VALUE VERSUS PRICING EARNINGS One approach is pricing book

PRICING BOOK VALUE VERSUS PRICING EARNINGS One approach is pricing book value and then another approach is pricing earnings. Question: Pricing book value technique anchors the valuation on book value, which is the bottom line of the (which financial statement) _______________? Pricing earnings value technique anchors the valuation on earnings, which is the bottom line of (which financial statement) _____________________?

RISK AND RETURN In an equity research report, an analyst calculates

RISK AND RETURN In an equity research report, an analyst calculates a forward earnings yield of 7% on a particular company common stock. Noting that this yield is higher than the 5% yield on a 10-year Treasury, the analyst reports a buy recommendation for the common stock and no favorable recommendation, just based on “yield”, for the Treasury bond. Question: Is this a balanced view? Could the analyst be making a mistake in his/her analysis?

Problem 6-4A Prepare a bank reconciliation and record adjustments L.O. P3

Problem 6-4A Prepare a bank reconciliation and record adjustments L.O. P3 [The following information applies to the questions displayed below.] The following information is available to reconcile Hamilton Company’s book balance of cash with its bank statement cash balance as of July 31, 2009: a. On July 31, the company’s Cash account has a $25,864 debit balance, but its July bank statement shows a $28,298 cash balance. b. Check No. 3031 for $1,560 and Check No. 3040 for $772 were outstanding on the June 30 bank reconciliation. Check No. 3040 is listed with the July canceled checks, but Check No. 3031 is not. Also, Check No. 3065 for $556 and Check No. 3069 for $2,328, both written in July, are not among the canceled checks on the July 31 statement. c. In comparing the canceled checks on the bank statement with the entries in the accounting records, it is found that Check No. 3056 for July rent was correctly written and drawn for $1,250 but was erroneously entered in the accounting records as $1,240. d. A credit memorandum enclosed with the July bank statement indicates the bank collected $6,500 cash on a noninterest-bearing note for Hamilton, deducted a $33 collection fee, and credited the remainder to its account. Hamilton had not recorded this event before receiving the statement. e. A debit memorandum for $805 lists a $795 NSF check plus a $10 NSF charge. The check had been received from a customer, Evan Shaw. Hamilton has not yet recorded this check as NSF. f. Enclosed with the July statement is a $10 debit memorandum for bank services. It has not yet been recorded because no previous notification had been received. g. Hamilton’s July 31 daily cash receipts of $7,652 were placed in the bank’s night depository on that date, but do not appear on the July 31 bank statement. References

Paloma Company estimates uncollectible accounts using the allowance method at December

Paloma Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $95,000 $66,000 $15,000 $6,000 $3,000 $5,000 Percent uncollectible 1 % 2 % 4 % 7 % 12 %

1. During the fiscal year ended 6/30/10, the City of Hooksett

1. During the fiscal year ended 6/30/10, the City of Hooksett engaged in the following transactions. REQUIRED: Assuming the city maintains its books and records in a manner that facilitates the preparation of its governmental fund financial statements, prepare all necessary journal entries that the City should make for each transaction. Clearly indicate in which fund the entry is being made. If no entry is required, write “No Entry Required.” a) In July 2009, the City issued $20 million in 6% general obligation term bonds to finance construction of a new building to house City offices. The bonds were issued at a premium of $200,000. b) In September 2009, the City transferred $1 million from the General Fund to cover the $.6 million principal and $.4 million interest payments due that month on debt issued in previous years. c) In September 2009, the City paid the principal and interest due from (b). d) In June 2010, the City transferred $2 million from the General Fund to cover the $1.2 million interest payment and the $.8 million principal payment due in July 2010 on the bonds issued in (a). 2. River Walk County voted to establish an internal service fund to account for printing and copying for all its departments and agencies. The County engaged in the following activities related to the new fund. REQUIRED: Prepare transactions to record these events in the internal service fund. If no entry is required, write “No Entry Required.” a) The County Commission voted to transfer $100,000 from the General Fund to the internal service fund to establish the new fund. b) The fund entered into a capital lease for equipment to be used in printing activities. The total present value of the lease obligation is $1,500,000. c) Issued $1 million in general obligation bonds at 101. The bonds were issued to acquire additional equipment. The bonds are to be serviced from the internal service fund. d) Purchased equipment at a cost of $780,000. The equipment has an estimated useful life of nine years and an estimated salvage value of $180,000. e) Billed the General Fund for copying and printing charges, $45,000. f) Paid salaries to printing employees, $25,000. 3. The City of Meredith received a donation from the estate of the late Kathy Smith to be used to support the City Public Library. The gift consisted of $200,000 cash and a portfolio of securities with a market value of $300,000. The securities have a book value of $250,000. The donor stipulated that the principal of the gift, including investment gains (realized and unrealized) but excluding investment losses, must be kept intact. The income must be used to care for and maintain the book collection at the Smith Public Library. All appropriate costs, including investment losses, may be charged against the revenues yearly to determine the amount available for the specified purposes. During the year, the City engaged in the following transactions on behalf of the Library. Prepare the appropriate entries in the City’s permanent fund. a) Accepted the donation. b) Received dividends and interest of $18,000. c) Purchased securities for $200,000. d) Sold securities that were part of the original gift (market value at date of gift $72,000; book value in hands of donor $68,000) for $75,000. e) Sold some of the securities that were acquired in transaction (c) for $51,000. They were acquired at a price of $55,000. f) The portfolio of securities at year-end had a market value of $377,000. Multiple Choice 1. Obligations issued in the name of a government on behalf of a nongovernmental entity is called a) Committed debt. b) Overlapping debt. c) Moral obligation debt. d) Conduit debt. Answer: 2. Which of the following is NOT a budget typically prepared for an activity accounted for in a proprietary fund? a) Capital budget. b) Flexible budget. c) Appropriation budget. d) Cash budget. Answer: 3. The financial reporting entity is composed of a) The primary government, all legally separate organizations for which the primary government is financially accountable and any organizations whose omission would cause the primary governments financial statements to be misleading or incomplete. b) The primary government and all legally separate organizations for which the primary government is financially accountable. c) The primary government and all legally separate governments for which the primary government is financial accountable. d) The primary government. Answer: 4. The auditor’s report generally includes an opinion on which of the following sections of the CAFR? a) The introductory and the financial sections only. b) The introductory section, the financial section, and the statistical section. c) The financial section only. d) The statistical and the financial sections only. Answer: 5. Governmental entities enter into capital leases, rather than conventional buy and borrow arrangements for which of the following reasons? Capital leases a) Reduce the cash outflows related to the asset acquisition. b) Have less effect on governmental fund balances than buy and borrow arrangements. c) Are less expensive overall than buy and borrow arrangements. d) May be an effective means of circumventing debt limitations. Answer: 6. Which of the following is a valid reason for governmental entities to engage in business-type activities? a) The entity can provide the services more cheaply or efficiently than can a private firm. b) The entity does not want control over the activity. c) The activity competes with general government activities. d) The entity does not want to subsidize the activity. Answer: 7. Which of the following would NOT be accounted for in a fiduciary fund of a governmental entity? a) Expendable resources held for the benefit of other governmental units. b) Nonexpendable resources held for the benefit of other governmental units. c) Funds held as an agent for other entities. d) Nonexpendable resources held for the benefit of the government holding the resources. Answer: 8. A Comprehensive Annual Financial Report for the City of Manchester need not include which of the following sections? a) Condensed summary data. b) Financial section. c) Introductory section. d) Statistical section. Answer: 9. A defined contribution pension plan is one in which the employer agrees to which of the following? a) The employer agrees to make actuarially determined payments to a pension plan that guarantees that the employee will receive a specified pension (usually determined by length of service and salary). b) The employer agrees to pay specified amounts (usually determined by length of service and salary) to the employee upon retirement. c) The employer agrees to make payments to a specified pension plan with no guarantee of a specific pension amount to be paid to the employee. d) The employer agrees to make actuarially determined payments to a pension plan AND guarantees that the employee will receive a specified pension benefit (usually determined by length of service and salary). Answer: 10. The appropriate basis of accounting for the proprietary funds of a governmental entity is a) Modified accrual. b) Full accrual. c) Cash basis. d) None of the above. Answer: 11. Why would a government issue revenue bonds (which generally are issued at a higher rate of interest than general obligation bonds) even though the government knows that if revenues from the project are not sufficient to cover principal and interest payments, the government will use resources from general government activities to fund the principal and interest payments? a) Revenue bonds may permit the interest costs to be passed on to the users of the services financed. b) Revenue bonds may not require approval of the voters. c) Revenue bonds may not be considered in legal debt limitations. d) All of the above. Answer: 12. Which of the following activities of a governmental entity should be accounted for in a fiduciary fund? a) Funds received from an individual who specified that the principal must be kept intact but the income can be used to support families of police officers killed in the line of duty. b) Funds received from the federal government to support public transportation activities. c) Funds received from a contractor to assist with the development of utility infrastructure. d) Funds received from the state government that must be used to purchase capital assets. Answer: 13. In which of the following circumstances must an enterprise fund be used to account for the activity? a) To finance the acquisition of plant facilities, a newly created electric utility issues revenue bonds that will be repaid solely from operations of the electric utility. b) To finance the acquisition of plant facilities, a newly created electric utility issues general obligation debt. c) To acquire needed plant facilities, a newly created electric utility enters into long-term lease agreements. d) A newly created electric utility fund will finance its operations by a charge to users based on kilowatt hours used. Answer: 14. When the proceeds of long term debt are reported in governmental fund financial statements a) They are reported only as another financing use—debt proceeds. b) They are reported only as an increase in liabilities in the funds. c) They are reported only as another financing source—debt proceeds. d) They are reported only as revenues in the funds. Answer: 15. A governmental entity receives a gift of cash and investments with a fair value of $1,300,000. The donor specified that the earnings from the gift must be used to beautify city-owned parks and the principal must be re-invested. The $1,300,000 gift should be accounted for in which of the following funds? a) Private-purpose trust fund. b) Permanent fund. c) General fund. d) Agency fund. Answer: 16. Obligations of property owners within a particular government for their proportionate share of debts of other governments with whom they share boundaries are called a) Committed debts. b) Overlapping debts. c) Moral obligation debts. d) Conduit debts. Answer: 17. Permanent funds are classified as a) Trust funds. b) Governmental funds. c) Proprietary funds. d) Fiduciary funds. Answer: 18. A plan’s unfunded actuarially accrued liability is the excess of the: a) Actuarially determined plan cost over the plan assets. b) Actuarially determined pension liability over the total contributions c) Actuarially determined pension liability over the plan assets. d) Actuarially determined plan cost over the plan assets. Answer: 19. Which of the following is NOT a fiduciary fund? a) Investment trust fund. b) Permanent fund. c) Pension trust fund. d) Private purpose trust fund. Answer: 20. The State has a legally separate State Building Authority which has a board appointed by the Governor. The Authority issues debt in its own name, holds title to buildings in its own name, and leases its building exclusively to the State. In what manner would the Authority be included in the State’s Basic Financial Statements? a) Discretely presented. b) Not included in any manner. c) Note disclosure only. d) Blended. Answer:

P2-27A (L. OBJ. 2, 3, 4, 5) Analyzing and journalizing transactions,

P2-27A (L. OBJ. 2, 3, 4, 5) Analyzing and journalizing transactions, posting, and preparing a trial balance [40–50 min] Party Time Amusements Company owns movie theaters. Party Time engaged in the following business transactions in 2012: Nov 1 2 5 10 15 15 16 28 30 Darrell Palusky invested $350,000 personal cash in the business by depositing that amount in a bank account titled Party Time Amusements. The business gave capital to Palusky. Paid $320,000 cash to purchase a theater building. Borrowed $220,000 from the bank. Palusky signed a note payable to the bank in the name of Party Time. Purchased theater supplies on account, $1,000. Paid $600 on account. Paid property tax expense on theater building, $1,400. Paid employees’ salaries $2,900, and rent on equipment $1,300. Make a single compound entry. Palusky withdrew $8,000. Received $20,000 cash from service revenue and deposited that amount in the bank. Party Time Amusements uses the following accounts: Cash; Supplies; Building; Accounts payable; Notes payable; Darrell Palusky, Capital; Darrell Palusky, Withdrawals; Service revenue; Salary expense; Rent expense; Property tax expense.

Why are warranty liabilities usually recognized on the balance sheet as

Why are warranty liabilities usually recognized on the balance sheet as liabilities even when they are uncertain?

Journalize the following transactions using the allowances method of accounting for

Journalize the following transactions using the allowances method of accounting for uncollectible receivables. June 10 Received $1,100 from Jim Dobbs and wrote off the remainder owed of $4,000. Oct 11 Reinstated the accounts of Jim Dobbs and received $4,000 cash in full payment.

If a corporation purchases a lot and building and subsequently tears

If a corporation purchases a lot and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on the significance of the cost allocated to the building in relation to the combined cost of the lot and building. the contemplated future use of the parking lot. the intention of management for the property when the building was acquired. the length of time for which the building was held prior to its demolition.

Which of the following statements about involuntary conversions is false? An

Get college assignment help at uniessay writers Which of the following statements about involuntary conversions is false? An involuntary conversion may result from condemnation or fire. The gain or loss from an involuntary conversion may be reported as an extraordinary item. The gain or loss from an involuntary conversion should not be recognized when the enterprise reinvests in replacement assets. All of these.

Redstone Company spent $190,000 developing a new process, $45,000 in legal

Redstone Company spent $190,000 developing a new process, $45,000 in legal fees to obtain a patent, and $91,000 to market the process that was patented. How should these costs be accounted for in the year they are incurred?

Werth Company asks you to review its December 31, 2010, inventory

Werth Company asks you to review its December 31, 2010, inventory values and prepare the necessary adjustments to the books. The following information is given to you. 1. Werth uses the periodic method of recording inventory. A physical count reveals $329,786 of inventory on hand at December 31, 2010. 2. Not included in the physical count of inventory is $18,842 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31. 3. Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $17,971 on December 31. The merchandise cost $10,319, and Bubbey received it on January 3. 4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $21,945. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded. 5. Not included in inventory is $11,990 of merchandise purchased from Minsky Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30. 6. Included in inventory was $14,655 of inventory held by Werth on consignment from Jackel Industries. 7. Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $26,536 on December 31. The cost of this merchandise was $14,770, and Sims received the merchandise on January 5. 8. Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $2,106 which had been sold to a customer for $3,650. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged. (a) Determine the proper inventory balance for Werth Company at December 31, 2010.

(Inventoriable Costs–Error Adjustments) Werth Company asks you to review its December

(Inventoriable Costs–Error Adjustments) Werth Company asks you to review its December 31, 2010, inventory values and prepare the necessary adjustments to the books. The following information is given to you. 1. Werth uses the periodic method of recording inventory. A physical count reveals $329,786 of inventory on hand at December 31, 2010. 2. Not included in the physical count of inventory is $18,842 of merchandise purchased on December 15 from Browser. This merchandise was shipped f.o.b. shipping point on December 29 and arrived in January. The invoice arrived and was recorded on December 31. 3. Included in inventory is merchandise sold to Bubbey on December 30, f.o.b. destination. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale on account for $17,971 on December 31. The merchandise cost $10,319, and Bubbey received it on January 3. 4. Included in inventory was merchandise received from Dudley on December 31 with an invoice price of $21,945. The merchandise was shipped f.o.b. destination. The invoice, which has not yet arrived, has not been recorded. 5. Not included in inventory is $11,990 of merchandise purchased from Minsky Industries. This merchandise was received on December 31 after the inventory had been counted. The invoice was received and recorded on December 30. 6. Included in inventory was $14,655 of inventory held by Werth on consignment from Jackel Industries. 7. Included in inventory is merchandise sold to Sims f.o.b. shipping point. This merchandise was shipped after it was counted. The invoice was prepared and recorded as a sale for $26,536 on December 31. The cost of this merchandise was $14,770, and Sims received the merchandise on January 5. 8. Excluded from inventory was a carton labeled “Please accept for credit.” This carton contains merchandise costing $2,106 which had been sold to a customer for $3,650. No entry had been made to the books to reflect the return, but none of the returned merchandise seemed damaged. (a) Determine the proper inventory balance for Werth Company at December 31, 2010. $ (b) Prepare any correcting entries to adjust inventory to its proper amount at December 31, 2010. Assume the books have not been closed. Description/Account Debit Credit (To reverse sale entry in 2010.) (To record purchase of merchandise in 2010.) (To record merchandise returned.)

“Sales-Type/BPO Lease Problem: Sheldon Co. leases some heavy construction equipment from

“Sales-Type/BPO Lease Problem: Sheldon Co. leases some heavy construction equipment from Molly Inc. The lease is for 5 years and the $250,000 payments are made semi-annually beginning on August 1, 2005, the day the lease is signed. The equipment has a life of 8 years. At the end of the lease, Sheldon can purchase the equipment using a bargain purchase option in the lease. The BPO is $400,000. Molly charges an interest rate of 8%. The FMV of the equipment at the inception of the lease is $2,379,058.57. At the end of the lease, Sheldon exercises the BPO. The cost of the equipment to Molly is $2,000,000. Molly has no significant uncertainties about future unreimbursable costs. Also, collectability of the cash is reasonably assured. Assume that Molly makes reversing entries at the beginning of each year- be careful of this when reporting financial statement balances. Prepare an amortization table for the lease. Prepare the journal entries that Molly would record for each year of the lease. You do not have to record the reversing entries for the purposes of this exercise. You will need to assume they are made, but I am not asking you to record them here. You may elect to do so if it helps you keep track of what is going on. For the years ended 2006 and 2007, identify what would appear on the Balance Sheet, Income Statement and Statement of Cash Flows for Molly, related to the lease. On the Balance Sheet, you need to separate the current assets from the non current assets. On the Statement of Cash Flows assume the direct method is used. Also, indicate the section of the statement the cash flow would appear in and identify the source or use of cash (ex. Operating section –cash received from dividends). Ignore taxes. You need not report cash on the balance sheet. I have completed the amortization table and journal entries and believe I did them correctly. However, it is a different story with the financial statements. I’m not an idiot but I really feel like one. I lack confidence in my financial statement abilities because we aren’t instructed how to calculate and report in certain circumstances, and I lack background accounting knowledge. I feel like I am doing them incorrectly, and I am confused on the statement of cash flows. We spent point two seconds on that. This is my first accounting class in years, and I know only what is provided from the professor and the book. The internet has offered no help- I’ve looked for days! I know I am making a mountain out of a molehill. Help?”

What is the probability door number 3 contains a prize after

What is the probability door number 3 contains a prize after to the host opening door number 5?

Please see the attached file, and help me solve the questions,

Please see the attached file, and help me solve the questions, because I’ve no idea. Thanks

Division A currently sells its product to outside parties at a

Division A currently sells its product to outside parties at a price of $20 per unit. It incurs variable costs of $7 per unit and fixed costs of $50,000 per month. Monthly production is typically 10,000 units, and the division purchases no materials internally. Division B can use the product that Division A produces as a raw material in its operations. If Division B purchases the units from Division A, Division B would need to pay $1.50 per unit in shipping costs to an outside freight company. Alternatively, Division B can buy the units from a separate outside vendor at a delivered price of $21 per unit. Either way, Division B plans on meeting the demand of all its customers. The two divisions are trying to work out a mutually agreeable transfer price, and have agreed that incremental costs do not include fixed costs. A. Assume division A has ample idle capacity. 1) Determine the INCREMENTAL cost PER UNIT of the organization as a WHOLE if Division B purchases the units INTERNALLY. Focus only on what happens if Division B purchases INTERNALLY. 2) Determine the OPPORTUNITY cost PER UNIT of Division A if Division B purchases the units INTERNALLY. Focus only on what happens if Division B purchases INTERNALLY. 3) Determine the INCREMENTAL cost PER UNIT of the organization as a WHOLE if Division B purchases the units EXTERNALLY. Focus only on what happens if Division B purchases EXTERNALLY. 4) Determine the OPPORTUNITY cost PER UNIT of Division A if Division B purchases the units EXTERNALLY. Focus only on what happens if Division B purchases EXTERNALLY. B. Assume division A is ALREADY at full capacity before considering the interdivisional transfers. 1) Determine the INCREMENTAL cost PER UNIT of the organization as a WHOLE if Division B purchases the units INTERNALLY. Focus only on what happens if Division B purchases INTERNALLY. 2) Determine the OPPORTUNITY cost PER UNIT of Division A if Division B purchases the units INTERNALLY. Focus only on what happens if Division B purchases INTERNALLY. 3) Determine the INCREMENTAL cost PER UNIT of the organization as a WHOLE if Division B purchases the units EXTERNALLY. Focus only on what happens if Division B purchases EXTERNALLY. Incremental Cost = 0 4) Determine the OPPORTUNITY cost PER UNIT of Division A if Division B purchases the units EXTERNALLY. Focus only on what happens if Division B purchases EXTERNALLY.

I have attach the assignments in excel format as an attachment.

I have attach the assignments in excel format as an attachment.

“Division A currently sells its product to outside parties at a

“Division A currently sells its product to outside parties at a price of $20 per unit. It incurs variable costs of $7 per unit and fixed costs of $50,000 per month. Monthly production is typically 10,000 units, and the division purchases no materials internally. Division B can use the product that Division A produces as a raw material in its operations. If Division B purchases the units from Division A, Division B would need to pay $1.50 per unit in shipping costs to an outside freight company. Alternatively, Division B can buy the units from a separate outside vendor at a delivered price of $21 per unit. Either way, Division B plans on meeting the demand of all its customers. The two divisions are trying to work out a mutually agreeable transfer price, and have agreed that incremental costs do not include fixed costs. A. Assume division A has ample idle capacity. 1) Determine the INCREMENTAL cost PER UNIT of the organization as a WHOLE if Division B purchases the units INTERNALLY. Focus only on what happens if Division B purchases INTERNALLY. 2) Determine the OPPORTUNITY cost PER UNIT of Division A if Division B purchases the units INTERNALLY. Focus only on what happens if Division B purchases INTERNALLY. 3) Determine the INCREMENTAL cost PER UNIT of the organization as a WHOLE if Division B purchases the units EXTERNALLY. Focus only on what happens if Division B purchases EXTERNALLY. 4) Determine the OPPORTUNITY cost PER UNIT of Division A if Division B purchases the units EXTERNALLY. Focus only on what happens if Division B purchases EXTERNALLY. B. Assume division A is ALREADY at full capacity before considering the interdivisional transfers. 1) Determine the INCREMENTAL cost PER UNIT of the organization as a WHOLE if Division B purchases the units INTERNALLY. Focus only on what happens if Division B purchases INTERNALLY. 2) Determine the OPPORTUNITY cost PER UNIT of Division A if Division B purchases the units INTERNALLY. Focus only on what happens if Division B purchases INTERNALLY. 3) Determine the INCREMENTAL cost PER UNIT of the organization as a WHOLE if Division B purchases the units EXTERNALLY. Focus only on what happens if Division B purchases EXTERNALLY. Incremental Cost = 0 4) Determine the OPPORTUNITY cost PER UNIT of Division A if Division B purchases the units EXTERNALLY. Focus only on what happens if Division B purchases EXTERNALLY.

Absorption Costing and Variable Costing Problem #1 Absorption Costing and Variable

Absorption Costing and Variable Costing Problem #1 Absorption Costing and Variable Costing Lynch company manufactures and sells a single product. The following costs were incurred during the company’s first year of operations: Variable costs per unit: Manufacturing: Direct materials………………………………. $6 Direct labor ………………………………… $9 Variable manufacturing overhead…………… $3 Variable selling and administrative …………….. $4 Fixed costs per year: Fixed manufacturing overhead………………… $300,000 Fixed selling and administrative………………. $190,000 During the year, the company produced 25,000 units and sold 20,000 units. The selling price of the company’s product is $50 per unit. Instructions: Assume that the company uses the absorption costing method: a. Compute the unit product cost. b. Prepare an income statement for the year. Assume that the company uses the variable costing method: a. Compute the unit product cost. b. Prepare an income statement for the year.

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