Question

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 51,000 to 91,000 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 81,000 units during the year at a selling price of $9.67 per unit. Prepare a contribution format income statement for the year. Units Produced and Sold 51,000 71,000 91,000 Total costs: Variable cost Fixed cost 147,900 410,000 557,900 Total costs $ 0 $ Cost per unit: Variable cost Fixed cost Total cost per unit $ 0.00 $ 0.00 $ 0.00 Harris Company Contribution Format Income Statement Sales $ 783,270 Variable expenses Contribution margin Fixed expense Net operating income

Answer 1

Soution

	Units produced and sold
	51000	71000	91000
Total costs:
Variable costs	$ 147,900	$ 205,900*	$ 263,900
Fixed costs	$ 410,000	$ 410,000	$ 410,000
Total costs:	$ 557,900	$ 615,900	$ 673,900
Cost per unit
Variable costs	$ 2.90	$ 2.90	$ 2.90
Fixed costs	$ 8.04	$ 5.77	$ 4.51
Total Cost per unit	$ 10.94	$ 8.67	$ 7.41

*205900=147900/51000 x 71000

Variable cost or Fixed cost per unit = Cost / Units

Fixed cost in total remains same at all levels.

.

Harris Company
Contribution margin income statement
Sales revenue	$ 783,270
Less: Variable cost (2.40 x 85000)	$ 234,900
Contribution margin	$ 548,370
Fixed cost	$ 410,000
Operating profit	$ 138,370