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 55,000 to 95,000 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 85,000 units during the year at a selling price of $9.50 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 55,000 75,000 95,000 $ 137,500 450,000 587,500 $ Total costs: Variable cost Fixed cost Total costs Cost per unit Variable cost Fixed cost Total cost per unit Required 1 Required 2 >

Answer 1

Requirement 1:

Units Produced and Sold

Particulars	55,000	75,000	95,000
Total Costs:
Variable cost	$137,500	$187,500	$237,500
Fixed cost	$450,000	$450,000	$450,000
Total costs	$587,500	$637,500	$687,500
Cost per unit:
Variable cost	$2.50	$2.50	$2.50
Fixed cost	$8.18	$6.00	$4.74
Total cost per unit	10.68	$8.50	$7.24

Working Notes:

55,000 units

Variable cost per unit = $137,500 / 55,000 units = $2.50 per unit

Fixed cost per unit = $450,000 / 55,000 units = $8.18 per unit

Total cost per unit = $587,500 / 55,000 units = $10.68 per unit

75,000 Units

Variable cost = 75,000 Units * $2.50 per unit = $187,500

Fixed cost = $450,000 (constant)

Variable cost per unit = $187,500 / 75,000 Units = $2.50 per unit

Fixed cost per unit = $450,000 / 75,000 Units = $6.00 per unit

Total cost per unit = $637,500 / 75,000 Units = $8.50 per unit

95,000 Units

Variable cost = 95,000 Units * $2.50 per unit = $237,500

Fixed cost = $450,000 (constant)

Variable cost per unit = $237,500 / 95,000 Units = $2.50 per unit

Fixed cost per unit = $450,000 / 95,000 Units = $4.74 per unit

Total cost per unit = $687,500 / 95,000 units = $7.24 per unit

Requirement 2:

Harris Company

Contribution Format Income Statement

Particulars	$
Sales Revenue (85,000 Units * $9.50 per unit)	807,500
Less: Variable cost (85,000 Units * $2.50 per unit)	212,500
Contribution Margin	595,000
Less: Fixed cost	450,000
Net Operating Income	145,000

All the best...