CompuDesk, Inc., makes an oak desk specially designed for personal computers. Th

Question

CompuDesk, Inc., makes an oak desk specially designed for personal computers. The desk sells for $300. Data for last year’s operations follow:

Assume that the company uses variable costing. Compute the unit product cost for one computer desk.

Assume that the company uses variable costing. Prepare a contribution format income statement for the year. (Input all amounts as positive values except losses which should be indicated by a minus sign.)

CompuDesk, Inc., makes an oak desk specially designed for personal computers. The desk sells for $300. Data for last year’s operations follow:

Explanation / Answer

Compudesk Inc. All Amounts in $ 1. Cost per unit, based on variable costing No. of units produced 9700 Variable Costs per unit 140 Total Variable Costs 1358000 Total Fixed Costs 1040000 Total Costs 2398000 Cost per unit produced 247.22 $ per desk 2. Contribution Income Statement format for the year Sales 2670000 Less : Variable Costs incurred 1246000 8,900 Units X $ 140 per unit Contribution Margin 1424000 Fixed Costs 1040000 Net Income for the year 384000 3. Breakeven point is a quantity where Revenues = Costs Assuming the breakeven number of units sold as X 300X - 140X = $ 1,040,000 Thus , 160X = $ 1,040,000 or X = 6500 units

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