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 68,000 to 108,000 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 98,000 units during the year at a selling price of $7.08 per unit. Prepare a contribution format income statement for the year.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2

Complete the schedule of the company’s total costs and costs per unit as given in the relevant tab below. (Round the per unit variable cost and fixed cost to 2 decimal places.)

	Units Produced and Sold 68,000 88,000 108,000 Total costs: Variable costs $142,800 Fixed costs 350,000 Total costs $492,800 $0 $0 Cost per unit: Variable cost Fixed cost Total cost per unit $0.00 $0.00 $0.00

Assume that the company produces and sells 98,000 units during the year at a selling price of $7.08 per unit. Prepare a contribution format income statement for the year.

	Harris Company Contribution Format Income Statement

Answer 1

Requirement 1)	Units Produced and Sold
	68,000	88,000	108,000
Total costs:
Variable costs ($142,800/68,000 units = $2.10 * 88,000 units); ($2.10 * 108,000 units) (a)	$142,800	$184,800	$226,800
Fixed costs (b)	$350,000	$350,000	$350,000
Total costs (a + b)	$492,800	$534,800	$576,800
Cost per unit:
Variable cost ($142,000/68,000 units) (c )	$2.10	$2.10	$2.10
Fixed Cost ($350,000/68,000 units); ($350,000/88,000 units); ($350,000/108,000 units) (d)	$5.15	$3.98	$3.24
Total cost per unit (c + d)	$7.25	$6.08	$5.34
Note: Fixed costs are same at all levels from 68,000 to 108,000 units and variable cost per unit is always fixed.
Requirement 2)
Harris Company
Contribution Format Income Statement
Sales Revenue (98,000 units * $7.08 per unit)	$693,840
Less: Variable costs (98,000 units * $2.10 per unit)	($205,800)
Contribution Margin	$488,040
Less: Fixed Costs	($350,000)
Net Income	$138,040