Solution 1:
Breakeven point in unit sold = Fixed costs / CM per unit = ($110,000 + $50,000) / $4 = 40000 units
Solution 2a:
Computation of Unit Product Cost - Variable Costing | |||
Particulars | Year 1 | Year 2 | Year 3 |
Unit Product Cost: | |||
Direct material | $20.00 | $20.00 | $20.00 |
Direct Labor | $12.00 | $12.00 | $12.00 |
Variable manufacturing overhead | $7.00 | $7.00 | $7.00 |
Unit product cost | $39.00 | $39.00 | $39.00 |
Solution 2b:
Income Statement - Variable Costing - Haas Company | ||||
Particulars | Per Unit | Year 1 | Year 2 | Year 3 |
Sales | $46.00 | $1,840,000.00 | $1,380,000.00 | $2,070,000.00 |
Variable Costs: | ||||
Variable manufacturing Costs | $39.00 | $1,560,000.00 | $1,170,000.00 | $1,755,000.00 |
Variable Selling and administrative expenses | $3.00 | $120,000.00 | $90,000.00 | $135,000.00 |
Total Variable Costs | $42.00 | $1,680,000.00 | $1,260,000.00 | $1,890,000.00 |
Contribution Margin | $4.00 | $160,000.00 | $120,000.00 | $180,000.00 |
Fixed Expenses: | ||||
Fixed manufacturing overhead | $110,000.00 | $110,000.00 | $110,000.00 | |
Fixed Selling & Administrative Expenses | $50,000.00 | $50,000.00 | $50,000.00 | |
Net Operating Income | $0.00 | -$40,000.00 | $20,000.00 |
Solution 3a:
Computation of Unit Product Cost - Absorption Costing | |||
Particulars | Year 1 | Year 2 | Year 3 |
Unit Product Cost: | |||
Direct material | $20.00 | $20.00 | $20.00 |
Direct Labor | $12.00 | $12.00 | $12.00 |
Variable manufacturing overhead | $7.00 | $7.00 | $7.00 |
Fixed
manufacturing overhead ($110,000 / Nos of unit produced) |
$2.75 | $2.00 | $5.50 |
Unit Product Cost | $41.75 | $41.00 | $44.50 |
Solution 3b:
Income Statement - Absorption Costing - Haas Company | ||||||
Particulars | Year 1 | Year 2 | Year 3 | |||
Details | Amount | Details | Amount | Details | Amount | |
Sales | $1,840,000.00 | $1,380,000.00 | $2,070,000.00 | |||
Cost of Goods Sold: | ||||||
Cost of goods produced | $1,670,000.00 | $2,255,000.00 | $890,000.00 | |||
Less: Ending Inventory | $0.00 | $1,025,000.00 | $0.00 | |||
Add: Opening Inventory | $0.00 | $1,670,000.00 | $0.00 | $1,230,000.00 | $1,025,000.00 | $1,915,000.00 |
Gross Profit | $170,000.00 | $150,000.00 | $155,000.00 | |||
Variable Selling & Administrative Expenses | $120,000.00 | $90,000.00 | $135,000.00 | |||
Fixed Selling & Administrative Expenses | $50,000.00 | $50,000.00 | $50,000.00 | |||
Net Operating Income | $0.00 | $10,000.00 | -$30,000.00 |
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