[SOLVED] Question & Answer: Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total

harris company manufactures and sells a single product.

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[SOLVED] Question & Answer: Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total
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Harris Company manufactures and sells a single product. Required a. A partially completed schedule of the companys total and per unit costs over the relevant range of 58,000 to 98,000 units produced and sold annually is given below: Complete the schedule of the companys total and unit costs. (Round the variable cost and fixed cost to 2 decimal places.) Units Produced and Sold 58,000 78,000 98,000 Total costs $ 133,400 470,000 $ 603,400 Variable costs Fixed costs Total costs Cost per unit Variable cost Fixed cost Total cost per unit b. Assume that the company produces and sells 88,000 units during the year at a selling price of $9.33 per unit. Prepare a contribution format income statement for the year Harris Company Contribution Format Income Statement

Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total and per unit costs over the relevant range of 58,000 to 98,000 units produced and sold annually is given below: Complete the schedule of the company’s total and unit costs. (Round the variable cost and fixed cost to 2 decimal places.) Assume that the company produces and sells 88,000 units during the year at a selling price of $9.33 per unit. Prepare a contribution format income statement for the year.

Expert Answer

Variable cost/unit remains the same while total fixed costs remain the same irrespective of change in units.

58000 78000 98000
Total costs:
Variable costs $133400 (2.3*78000)=$179400 (2.3*98000)=$225400
Fixed costs $470,000 $470,000 $470,000
Total costs $603400 $649400 $695400
Cost per unit:
Variable cost (133400/58000)=$2.3 $2.3 $2.3
Fixed costs (470,000/58000)=$8.10 ((470,000/78000)=$6.03 (470,000/98000)=$4.80
Total cost per unit $10.4 $8.33 $7.1

b.

Particulars Amount($)
Sales(88000*$9.33) $821040
Less:Variable costs(88000*2.3) $202400
Contribution margin $618640
Less:Fixed costs $470,000
Net operating income $148,640.

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