Problem 6-17 Variable and Absorption Costing Unit Product Costs and Income Statements iLO1 LO2U Nickelson Company manufactures and sells one product. The following information pertains to each of the company\'s first three years ofoperations: Variable costs per unit Direct materials Direct labor $19 Variable manufacturing overhead $3 Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead $400,000 Fixed ing and administrative expenses $240,000 During its first year of operations Nickelson produced 100.000 units and sold 100,000 units. During its second year of operations it produced 115.000 units and sold 90,000 units. In its third year, Nickelson produced 80,000 uni and sold 105,000 uni The selling price ofthe company\'s product is $58 per unit. 1. Compute the company\'s break-even point in units sold. units Break-even unit sales 2. Assume the company uses variable costing: a. Compute the unit product cost for year 1.year2, and year3. (omit the sign in your response. ear2 Unit product cost b. Prepare an income statement for year 1, year 2,and year 3. ve 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. Variable Costing Income Statement Year (Click to select) Variable expenses: Click to select) (Click to select) Total variable expenses (Click to select) Fixed expenses: (Click to select Click to select) Total fixed expenses Click to select) 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. Omitthe sign in your response.) ear2 ear 3 Unit product cost b. Prepare an income statement for year 1,year 2,and year 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. Round your intermediate calculations to 2 decimal places. Omit the sign in your response.) Absorption Costing Income Statement ear2 (Click to select Click to select (Click to select) (Click to selecty Click to select) Year 3 Year 3 Solution 1) Break Even units Sales = Fixed Cost/Contribution Margin Break Even units Sales =(460000+240000)/ (58-27-19-3-2) Break Even units Sales = 100000 Units 2) Using Variable Costing a) b) 3) a) b) .

1. Problem 6-17 Variable and Absorption Costing Unit Product Costs and Income Statements iLO1
LO2U Nickelson Company manufactures and sells one product. The following information
pertains to each of the company's first three years ofoperations: Variable costs per unit Direct
materials Direct labor $19 Variable manufacturing overhead $3 Variable selling and
administrative Fixed costs per year: Fixed manufacturing overhead $400,000 Fixed ing and
administrative expenses $240,000 During its first year of operations Nickelson produced 100.000
units and sold 100,000 units. During its second year of operations it produced 115.000 units and
sold 90,000 units. In its third year, Nickelson produced 80,000 uni and sold 105,000 uni The
selling price ofthe company's product is $58 per unit. 1. Compute the company's break-even
point in units sold. units Break-even unit sales 2. Assume the company uses variable costing: a.
Compute the unit product cost for year 1.year2, and year3. (omit the sign in your response. ear2
Unit product cost b. Prepare an income statement for year 1, year 2,and year 3. ve 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. Variable Costing
Income Statement Year (Click to select) Variable expenses: Click to select) (Click to select)
Total variable expenses (Click to select) Fixed expenses: (Click to select Click to select) Total
fixed expenses Click to select) 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. Omitthe sign in your response.) ear2 ear 3 Unit product cost b. Prepare an
income statement for year 1,year 2,and year 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. Round your intermediate calculations to 2 decimal places. Omit the sign in your
response.) Absorption Costing Income Statement ear2 (Click to select Click to select (Click to
select) (Click to selecty Click to select) Year 3 Year 3
Solution
1) Break Even units Sales = Fixed Cost/Contribution Margin
Break Even units Sales =(460000+240000)/ (58-27-19-3-2)
Break Even units Sales = 100000 Units
2) Using Variable Costing
a)

2. b)
3)
a)
b)
Year 1 Year 2 Year 3
Unit Product Cost 49 49 49