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 67,000 to 107,000 units is given below: points 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 97,000 units during the year at a selling price of $9.42 per unit. Prepare a contribution format income statement for the year. eBook Print Complete this question by entering your answers in the tabs below. References 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 67,000 87,000 107,000 Total costs: Variable cost Fixed cost Total costs 194,300 480,000 674,300 $ 0 $ Cost per unit: Variable cost Fixed cost Total cost per unit | $ 0.00 $ 0.00 $ 0.00

Answer 1

Solution

	Units produced and sold
	67000	87000	107000
Total costs:
Variable costs	$ 194,300	$ 252,300*	$ 310,300
Fixed costs	$ 480,000	$ 480,000	$ 480,000
Total costs:	$ 674,300	$ 732,300	$ 790,300
Cost per unit
Variable costs	$ 2.90	$ 2.90	$ 2.90
Fixed costs	$ 7.16	$ 5.52	$ 4.49
Total Cost per unit	$ 10.06	$ 8.42	$ 7.39

*194300/67000 x 87000.

Harris Company
Contribution margin income statement
Sales revenue	$ 913,740
Less: Variable cost (2.40 x 85000)	$ 281,300
Contribution margin	$ 632,440
Fixed cost	$ 480,000
Operating profit	$ 152,440

Fixed cost in totality do not change but decrease on per unit level when production increase and increase on per unit level when production decrease.

Variable cost at per unit level is same so it increase in total when production increase.