Haas Company manufactures and sells one product. The following information perta
ID: 2590510 • 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 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.
Variable costs per unit: Manufacturing: Direct materials $ 20 Direct labor $ 12 Variable manufacturing overhead $ 3 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 390,000 Fixed selling and administrative expenses $ 210,000Explanation / Answer
Working Notes Marginal Cost Statement Amount $ 1 Sale Price Per Unit 48 Less Variable Cost a Direct Meterial -20 b Direct labor -12 c Variable manufacturing overhead -3 d Variable selling and administrative -1 -36 Contribution Per Unit 12 i Fixed manufacturing overhead 390,000 ii Fixed selling and administrative expenses 210,000 Total Fixed Cost 600,000 1 Computation of the company’s break-even point in unit sales ==> Break Even Pointg Units = Fixed Cost / Contribution Per Unit ==> = 50000 Units 2(a) Computation the unit product cost for Year 1, Year 2, and Year 3 Year 1 Year 2 Year 3 Variable Cost Direct Meterial 20 20 20 Direct labor 12 12 12 Variable manufacturing overhead 3 3 3 Variable selling and administrative 1 1 1 Total Variable Cost Per Unit (a) 36 36 36 Fixed Cost Numbnerf Units Produced 50000 65000 30000 Total Fixed Cost 600000 600000 600000 Fixed Cost Per unit (b) 12 9 20 Total Cost (a+b) 48 45 56
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.