O'Donnell Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials $26 Direct labor $16 Variable manufacturing overhead $5 Variable selling and administrative $2 Fixed costs per year: Fixed manufacturing overhead $580,000 Fixed selling and administrative expenses $180,000 During its first year of operations, O'Donnell produced 95,000 units and sold 79,000 units. During its second year of operations, it produced 85,000 units and sold 96,000 units. In its third year, O'Donnell produced 82,000 units and sold 77,000 units. The selling price of the company's product is $76 per unit. 3. value: 3.00 points Required information
Required:
1. Assume the company uses variable costing and a FIFO inventory flow assumption (FIFO means first-in first-out. In other words, it assumes that the oldest units in inventory are sold first):
a. Compute the unit product cost for year 1, year 2, and year 3.
b. Prepare an income statement for year 1, year 2, and year 3.