Question 19: Haas Company manufactures and sells one product. The following info

Question

Question 19: 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.)

Question 19: Haas Company manufactures and sells one product. The following information pertains to each of the company’s first three years of operations:

Explanation / Answer

A)Total variable cost per unit =25+17+8+3 =53 (materials + labour + VMOH + VSE)

Contribution per unit = 57-53 = $4

Break even point in units sold = fixed cost/contribution per unit = 240000/4 = 60000 units

2)A) calculation of unit product cost under variable costing

variable selling costs are not considered in product costs because they are incurred at the time of Sale not production.

Under absorption costing,All production costs,variable and fixed,are included when determining unit product cost.Under variable cost,only variable production costs are included in product costs.

Unit cost under absorption costing:

Income statement under absorption costing:

Particulars Year 1 year 2 year 3 No of units produced 60000 75000 40000 Variable cost @50 3000000 3750000 2000000 Total costs 3000000 3000000 2000000 unit costs 50 50 50

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