Exercise 6-7 Understanding Cost Behaviour and Contribution Margin Income Stateme

Question

Exercise 6-7 Understanding Cost Behaviour and Contribution Margin Income Statement (LO1 CC1, 3; L03 - CC12) Harris Company manufactures and sells a single product. A partially completed schedule of the company's total and per-unit costs over the relevant range of 39,000 to 59,000 units produced and sold annually is given below Required 1. Complete the schedule of the company's total and unit costs. (Round the "Cost per unit" answers to 2 decimal places.) Units Produced and Sold 39,000 49,000 59,000 Total costs: Fixed costs Total costs Cost per unit: Variable costs $ 269,100 425,100 $ 694,200 Variable costs Fixed costs Total cost per unit

Explanation / Answer

Answer =1 ) UNIT PRODUCED AND SOLD Particulars 39,000 Units 49,000 Units 59,000 Units Total Cost Variable Costs 269100 338100 407100 Fixed Costs 425100 425100 425100 Total Cost 694200 763200 832200 Cost Per Units Varibale Costs 6.90 6.90 6.90 (269,100 / 39,000 Units) Fixed Costs 10.90 8.68 7.21 ($ 425,100 / 39,000 Units) Toal Cost Per Unit 17.80 15.58 14.11 Answer =2) CALCULATION OF THE CONTRIBUTION MARGIN INCOME STATEMENT PARTICULARS AMOUNT Revenue $               9,61,200 (54,000 X 17.80) Less: Variable Cost $               3,72,600 (54,000 X 6.90) Contribution Margin $               5,88,600 Less: Fixed Cost $               4,25,100 Net Income $               1,63,500 Answer =1 ) UNIT PRODUCED AND SOLD Particulars 39,000 Units 49,000 Units 59,000 Units Total Cost Variable Costs 269100 338100 407100 Fixed Costs 425100 425100 425100 Total Cost 694200 763200 832200 Cost Per Units Varibale Costs 6.90 6.90 6.90 (269,100 / 39,000 Units) Fixed Costs 10.90 8.68 7.21 ($ 425,100 / 39,000 Units) Toal Cost Per Unit 17.80 15.58 14.11 Answer =2) CALCULATION OF THE CONTRIBUTION MARGIN INCOME STATEMENT PARTICULARS AMOUNT Revenue $               9,61,200 (54,000 X 17.80) Less: Variable Cost $               3,72,600 (54,000 X 6.90) Contribution Margin $               5,88,600 Less: Fixed Cost $               4,25,100 Net Income $               1,63,500

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