Haas Company manufactures and sells one product. The following information perta
ID: 2483711 • Letter: H
Question
Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:
During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company’s product is $57 per unit.
Required:
Compute the unit product cost for year 1, year 2, and year 3.
Prepare an income statement for year 1, year 2, and year 3.
Compute the unit product cost for year 1, year 2, and year 3. (Round your intermediate and final answers to 2 decimal places.)
Prepare an income statement for year 1, year 2, and year 3. (Round your intermediate calculations to 2 decimal places.)
Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:
Explanation / Answer
Answer 2. a. Calculation of Cost Per Unit Under Variable Costing Year 1 2 3 Direct Material 25 25 25 Direct Labor 12 12 12 Variable MOH 4 4 4 Total Cost per Unit 41 41 41 Answer 2. b. Income Statement Under Variable Costing Year 1 2 3 Sales in Units 60,000 50,000 65,000 SP Per Unit 57 57 57 Sales in $ 3,420,000 2,850,000 3,705,000 Less: Cost of Goods Sold 2,460,000 2,050,000 2,665,000 Gross Margin 960,000 800,000 1,040,000 Less: Fixed MOH 480,000 480,000 480,000 Less: Selling & Admn. Exp. Variable 120,000 100,000 130,000 Fixed 360,000 360,000 360,000 Net Operating Profit - (140,000) 70,000 Answer 3. a. Calculation of Cost Per Unit Under Absorption Costing Year 1 2 3 Direct Material 25 25 25 Direct Labor 12 12 12 Variable MOH 4 4 4 Fixed MOH 8 6 12 (480000 / 60000) (480000 / 75000) (480000 / 40000) Total Cost per Unit 49 47 53 Answer 2. b. Income Statement Under Absorption Costing Year 1 2 3 Sales in Units 60,000 50,000 65,000 SP Per Unit 57 57 57 Sales in $ 3,420,000 2,850,000 3,705,000 Less: Cost of Goods Sold 2,940,000 2,370,000 3,305,000 Gross Margin 480,000.0 480,000.0 400,000.0 Less: Selling & Admn. Exp. Variable 120,000 100,000 130,000 Fixed 360,000 360,000 360,000 Net Operating Profit - 20,000 (90,000)
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