Question

Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: 29 21 Variable costs per unit: Manufacturing: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses WOP $ 420,000 $ 180,000 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 $72 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.

Answer 1

Hars Company Aas Bneak Even Pointsnit Fxed Cost t Contalbuutionpan unct S600,000 6,00 Unitr. in kings Calculaton Fixed Cot 2ం, 60 Eixed Manugathining erenhtad Fixee cettin Admin reaheac Cost 180,00 6 OD, 600 Exed Lac (b) catulatn Centribution pen Un SeuinPric Peral 2Less Vaniable Cost pen Unt 15 G RZE Dinct Matinial Dineet Veniable Menuachu Vaniable Suuing zastnin 0.t 3 72 Laboh D. H 6/2 $10 Contaibution pen unik

Vaniable Costig Auuming Compey ares Computatiog unit Pheduct cost Dineet Mateniel Dineet Labor voniabe Nanuactuniny H P Pneduet Pe unit : Pen Uni -$59 Pazet Yean 3 40,600 Year 1 ean 2 Pnaduetion (Uni) 60, Cit) Cest Pen unit G Unir Padtct cot $59 XCi$3540a $Y42a 2, 360, In Come statement Yean 3 Yean 1 4,320, 03600,7 Year 2 Sale (unit x #72) ,680, Voniable cast Less 1,740,600 , ,8 85 fI,260, 1050,5D1,365,a Nanuractening 0 H Cy0,0D 50, 585D $180,6T0 t50,080 195,60 6r0,6D S 650,6 inect Matenia Dinect Labon Sling admign o H Contributiog Less Fixed Cot Eixed Mfa. 0 H 420,0 4,20,0 420,6 ixid Selui Admn 0 80, 80,ro180,60 50,0 Propit Les)

(Cuer aborptin Cort mpny Assming the Paediecti Cost Pen unit (Amunt in $ Yean 2 Computatioo Yean 3 Me an 1 a.00 Dinect Dineit Labon naniabie Manugeaetuniny o Fixed ManugCetunig o H Prodeet Cost Penunit apo Matenio D 9-60 10.SO .60 69 50 64.60 66 60 Tntome Statement ean 3 eon 2 Wean O Sales E320, 03,60,604,680,on Les:-Cot o Choods Sod $1,CI500 2,780,aD Opening Stock edt Cart og gods manactun3,960,6504,8YS, Paoduchon Unit x Phoduet Cost oI,615, 67 $3, 960, 6T0$9,230, D4,395, 6 $ 360,60 370, 0D a85,6 Les Closing 2nven tony Total (2) oness Prokit -(2) LeStSetin1 Admin Expense Vaniable IS0,600 195, 80, 650 $ 180, $ 180,600 360,60 $180,600 330/60 $ 3FS, 65 40/6D90,) GFixed Totol y) 5 Prokit () y (Loss NIk