Question

1. 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 59,000 to 99,000 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 89,000 units during the year at a selling price of $8.32 per unit. Prepare a contribution format income statement for the year.

	Units Produced and Sold 59,000 79,000 99,000 Total costs: Variable costs $200,600 Fixed costs 310,000 Total costs $510,600 $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 89,000 units during the year at a selling price of $8.32 per unit. Prepare a contribution format income statement for the year.

Answer 1

Variable cost per unit and total fixed costs remain constant within the relevant range
Units Produced and Sold
	59,000	79,000	99,000
Total costs:
Variable costs	200,600	268,600	336,600
Fixed costs	310,000	310,000	310,000
Total costs	510,600	578,600	646,600
Cost per unit:
Variable cost	3.40	3.40	3.40
Fixed cost	5.25	3.92	3.13
Total cost per unit	8.65	7.32	6.53
Contribution format Income statement
Revenue	740,480
Less: Variable costs 89000*3.40	302,600
Contribution Margin	437,880
Less: Fixed costs	310,000
Net Operating Income	127,880