Haas Company manufactures and sells one product. The following information perta
ID: 2398288 • 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 Variable costs per unit: Manufacturing: 24 20 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses 440,000 200,000 During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year of operations, it produced 55,000 units and sold 30,000 units. In its third year, Haas produced 20,000 units and sold 45,000 units. The selling price of the company's product is $66 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 Complete this question by entering your answers in the tabs below Req 1 Req 2A Req 2B Req 3A Req 3BExplanation / Answer
Solution 1:
Contribution margin per unit = Sale price - Variable costs = $66 - ($24 + $20+$5+$1) = $16 per unit
Break even point in unit sales = Total fixed cost / Contribution margin per unit = ($440,000+$200,000) / $16 = $640,000/$16 = 40,000 units
Solution 2a:
Solution 2b:
Solution 3a:
Solution 3b:
Computation of Unit Product Cost - Variable Costing Particulars Year 1 Year 2 Year 3 Unit Product Cost: Direct material $24.00 $24.00 $24.00 Direct Labor $20.00 $20.00 $20.00 Variable manufacturing overhead $5.00 $5.00 $5.00 Unit Product Cost $49.00 $49.00 $49.00Related Questions
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