Haas Company manufactures and sells one product. The following information perta
ID: 2537735 • 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 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:
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.
.
Zola Company manufactures and sells one product. The following information pertains to the company’s first year of operations:
The company does not incur any variable manufacturing overhead costs or variable selling and administrative expenses. During its first year of operations, Zola produced 18,500 units and sold 14,800 units. The selling price of the company’s product is $51.30 per unit.
Required:
1. Assume the company uses super-variable costing:
a. Compute the unit product cost for the year.
b. Prepare an income statement for the year.
Variable costs per unit: Manufacturing: Direct materials $ 25 Direct labor $ 17 Variable manufacturing overhead $ 8 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 150,000 Fixed selling and administrative expenses $ 90,000Explanation / Answer
Question 1: Hass Company -
a)
Fixed Cost = Fixed manufacturing overhead + Fixed selling and administrative expenses
= 150,000+ 90,000 = 240,000
Break even sales (in units) = Fixed Costs/ Contribution per unit
= 240,000/ 4 = 60,000 units
2 . a) Unit product cost = Direct materials +Direct labor +Variable manufacturing overhead
= 25 + 17 + 8 = 50
The unit product cost will remain the same in Year 1, Year 2 and Year 3.
b) Income Statement using Variable Costing:
3) a)
b)
Selling price per unit 57 Less: Variable Costs Direct materials 25 Direct labor 17 Variable manufacturing overhead 8 Variable selling and administrative 3 Contribution per unit 4Related Questions
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