Haas Company manufactures and sells one product. The following information perta

Question

Haas 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 21 13 Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year Fixed manufacturing overhead Fixed S 330,000 $ 150.000 During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year of operations, it produced 55,000 units and sold 30,000 units. In its third year, Haas produced 20,000 units and sold 45,000 units. The selling price of the company's product is $52 per unit. Required 1. Compute the company's break-even point in unit sales. 2. Assume the company uses variable costing 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. 3. Assume the company uses absorption costing 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. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3A Req 38 Compute the company's break-even point in unit sales -even unit sales units

Explanation / Answer

Calculation of break even point in units

formulae:

total fixed expenses / contribution per unit

[330,000 $ + 150,000 $] / 12 $ = 40,000 units

calculation of contribution per unit

selling price 52 $

less : direct material 21 $

less: direct labour 13 $

less variable manufacturing over head 4 $

less variable selling and admin over head 2 $

  

contribution per unit 12 $

2  as per variable costing method

(a) calculation of unit product cost:

in variable costing only direct materal , direct labour and direct variable maufacturing overheads are included selling cost not included as it is a period cost

there per unit product cost [ 21 $ + 13 $ + 4 $ ] = 38 $

(b)   

per unit

$

year 1

40000 units

amount

$

year 2

30000 units

amount

$

year 3

45000 units

amount

$

3. as per absorption costing

(a) cost of cost of goods sold

per unit

$

year 1

40000 units

amount

$

per unit

$

year 2

30000 units

amount

$

per unit

$

year 3

45000 units

amount

$

*fixed manufacturing overheads rates are calculated by dividing fixed manufacturing overheads by no.units produced

(b)

per unit

$

year 1

40000 units

amount

$

year 2

30000 units

amount

$

year 3

45000 units

amount

$

particulars

per unit

$

year 1

40000 units

amount

$

year 2

30000 units

amount

$

year 3

45000 units

amount

$

sales 52 2,080,000 1,560,000 2,340,000 less direct material 21 840,000 630,000 945,000 less direct labour 13 520,000 390,000 585,000 less variable manufacturing over head 4 160,000 120,000 180,000 less variable selling and admin over head 2 80,000 60,000 90,000 contribution 12 480,000 360,000 540,000 less fixed manufacturing over head - 330,000 330,000 330,000 less fixed selling and admin over head - 150,000 150,000 150,000 net profit / (loss) nil (120,000) 60,000

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