work, Ch 6 6 Haas Company manufactures and sells one product. The following info
ID: 2539187 • Letter: W
Question
work, Ch 6 6 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 Direct labor Variable manufacturing overhead 20 Fixed costs per year: $390,8ee 218,0e0 Fixed selling and administrative expenses During its first year of operations, Haas produced 50,000 units and sold 50,000 units. During its second year of operations, it produced 65,000 units and sold 40.000 units. In its third year. Haas produced 30.000 units and sold 55,000 units. The selling price of the company's product is $48 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 7of8 Next >Explanation / Answer
1) Break even unit sales = total fixed cost/contribution margin total fixed cost fixed manufacturing overhead 390,000 fixed selling & administrative 210,000 total fixed cost 600,000 contribution margin per unit Selling price per unit 48 less variable cost Direct mterials 20 direct labor 12 VMOH 3 Variable selling & adm expense 1 36 contribution margin per unit 12 Break even unit sales = 600,000/12 50000 units answer 2a) unit product cost under variable costing Direct mterials 20 direct labor 12 VMOH 3 total unit product cost 35 year 1 year 2 year 3 unit product cost 35 35 35 b) Variable costing income statement units sold 50,000 40,000 55,000 year 1 year 2 year 3 sales 2400000 1920000 2640000 variable expenses variable cost of goods sold 1750000 1400000 1925000 variable selling & adm expense 50000 40000 55000 total variable expense 1800000 1440000 1980000 contribution margin 600000 480000 660000 fixed xpenses: fixed manufacturing overhead 390,000 390,000 390,000 fixed selling & adm expnes 210,000 210,000 210,000 total fixed expense 600,000 600,000 600,000 net income /loss 0 -120,000 60,000 3a) Absorptiong costing year 1 year 2 year 3 Direct mterials 20 20 20 direct labor 12 12 12 VMOH 3 3 3 FMOH (390000/units prod) 7.8 6 13 total unit product cost 42.8 41 48 year 1 year 2 year 3 unit product cost 42.8 41 48 3b) income statement year 1 year 2 year 3 sales 2400000 1920000 2640000 cost of goods sold 2140000 1640000 2465000 gross margin 260000 280000 175000 Selling and adm exp 260,000 250,000 265,000 net income/loss 0 30,000 -90,000 cost of goods sold for year 3 = 25000*41 + 30000*48 year 2 = 40000*41 year 1 = 50000*42.8
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