Exercise 1-11 Cost Behavior; Contribution Format Income Statement [LO1-4, LO1-6]

Question

Exercise 1-11 Cost Behavior; Contribution Format Income Statement [LO1-4, LO1-6] Harris Company manufactures and sells a single product. A partially completed schedule of the company's total costs and costs per unit over the relevant range of 54,000 to 94,000 units is given below Required: 1. Complete the schedule of the company's total costs and costs per unit as given in the relevant tab below 2. Assume that the company produces and sells 84,000 units during the year at a selling price of $9.24 per unit. Prepare a contribution format income statement for the year

Explanation / Answer

1)Variable cost Remain same in per unit irrespective of unit produced and sold whereas Fixed cost remain same in Total within a relevant range.

2)

Unit produced and sold 54000 74000 94000 Total cost variable cost 167400 229400     [3.1*74000] 291400     [3.1*94000] Fixed cost 380000 380000 380000 Total cost 547400 609400 671400 costper unit Variable cost 167400/54000=3.1 3.1 3.1 Fixed cost 380000/54000=7.04 380000/74000=5.14 380000/94000=4.04 Total cost per unit 10.14 8.24 7.14

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