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 50,000 to 90,000 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 80,000 units during the year at a selling price of $9.47 per unit. Prepare a contribution format income statement for the year.

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 50,000 70,000 90,000 Total costs: Variable costs $145,000 Fixed costs 390,000 390,000 390,000 Total costs $535,000 $390,000 $390,000 Cost per unit: Variable cost Fixed cost Total cost per unit $0.00 $0.00 $0.00

Assume that the company produces and sells 80,000 units during the year at a selling price of $9.47 per unit. Prepare a contribution format income statement for the year.

	Harris Company Contribution Format Income Statement

Answer 1

For Harris Company, Schedule of Total Cost and Cost per Unit Sold Units Produced and 50,000 70,000 90,000 Total Costs: Variable Cost Fixed Cost Total cost $145,000 $ 390,000 $535,000 $ 203,000 $ 390,000 $ 593,000 $261,000 $ 390,000 $ 651,000 $2.90 Cost per Uniti variable cost (145-50) Fixed Cost (390-50) Total Cost per unit $2.90 $ 7.80 $10.70 $5.57 $8.47 $2.90 $4.33 $7.23 2. Contribution format Income Statement for Production and sale of 80,000 units Rate per unit Amount ($) Sales Revenue $9.47 $ 757,600 Less: Variable cost $(2.90) $(232,000) Contribution Margin $6.57 $ 525,600 Less: Fixed Cost $ (390,000) & 135,600 Operating Income

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