Question

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 44,000 to 64,000 units produced and sold annually is given below: Required: 1. Complete the schedule of the company's total and unit costs. (Round the "Cost per unit" answers to 2 decimal places.) Units Produced and Sold 44,000 54,000 64,000 $ 325,600 501,600 $ 827,200 Total costs: Variable costs Fixed costs Total costs Cost per unit: Variable costs Fixed costs Total cost per unit 2. Assume that the company produces and sells 59,000 units during a year at a selling price of $18.80 per unit. Prepare a contribution margin income statement for the year. HARRIS COMPANY Income Statement For the Year Ended

Answer 1

Solution

	Units produced and sold
	44000	54000	64000
Total costs:
Variable costs	$ 325,600	$ 399,600*	$ 473,600
Fixed costs	$ 501,600	$ 501,600	$ 501,600
Total costs:	$ 827,200	$ 901,200	$ 975,200
Cost per unit
Variable costs	$ 7.40	$ 7.40	$ 7.40
Fixed costs	$ 11.40	$ 9.29	$ 7.84
Total Cost per unit	$ 18.80	$ 16.69	$ 15.24

*325600/44000 x 54000

Requirement 2

Harris Company
Contribution margin income statement
Sales revenue	$ 1,109,200
Less: Variable cost (59000 x $7.40)	$ 436,600
Contribution margin	$ 672,600
Fixed cost	$ 501,600
Operating profit	$ 171,000