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 54,000 to 94,000 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 84,000 units during the year at a selling price of $9.40 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 54,000 74,000 74,000 94,000 Total costs: Variable cost Fixed cost 183,600 370,000 553,600 Total costs Cost per unit: Variable cost Fixed cost Total cost per unit

Answer 1

1.

	Units Produced and Sold
	54,000	74,000	94,000
Total Costs:
Variable cost	183,600	74,000 x 3.4 = 251,600	94,000 x 3.4 =319,600
Fixed cost	370,000	370,000	370,000
Total costs	553,600	621,600	689,600
Cost per unit:
Variable cost	183,600/54,000 = 3.4	251,600/74,000 = 3.4	319,600/94,000 = 3.4
Fixed cost	370,000/54,000 = 6.85	370,000/74,000 =5	370,000/94,000 = 3.94
Total cost per unit	$10.25	$8.4	$7.34

Following concepts have been used in calculations:

Variable cost per unit = Total variable cost / Number of units

Total variable cost = Variable cost per unit x Number of units

Fixed cost per unit = Total fixed cost/Number of units

Total fixed cost does not change due to change in output.

2.

Harris Company
Contribution Format Income Statement
Sales ( 84,000 x 9.40)	789,600
Variable cost ( 84,000 x 3.4)	285,600
Contribution margin	504,000
Fixed cost	-370,000
Operating Profit	$134,000

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