2 Problem 6-18 Variable and Absorption Costing Unit Product Costs and Income Sta

Question

2 Problem 6-18 Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6- 2) 15 points Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: eBook Variable costs per unit Print Manufacturing: Direct materials 38 Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 540,88e 5 248,880 00 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,00o the company's product isS Haas produced 40,000 units and sold 65,000 units. The selling price of 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 Year3 b. Prepare an income statement for Year 1, Year 2, and Year 3. Complete this question by entering your answers in the tabs below Mc Prev2 of 2 Next

Explanation / Answer

Total Variable cost : 30+22+6+2 = $ 60

Total Fixed cost :540000+240000= 780000

1)Break eveb point : Fixed cost /(Price -variable cost)

                   = 780000 / (73-60)

                  = 780000/ 13

                 = 60000 units

2a)

3a)

For year 1,2 and 3 Direct material 30 Direct labor 22 variable overhead 6 Unit product cost under variable costing 58

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