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 64,000 to 104,000 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 94,000 units during the year at a selling price of $9.04 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 64,000 84,000 104,000 Total costs: Variable costs $179,200 Fixed costs 440,000 Total costs $619,200 $0 $0 Cost per unit: Variable cost Fixed cost Total cost per unit $0.00 $0.00 $0.00

Answer 1

Variable cost per unit = Total variable cost for 64000 units / 64000 = 179200 / 64000	2.80
Fixed cost will not change with the change in units produced and sold

	Units produced and Sold
	64000	84000	104000
Total costs :
Variable costs	179200	235200	291200
Fixed costs	440000	440000	440000
Total costs	619200	675200	731200
Cost per unit :
Variable cost ( Total variable cost / Units )	2.80	2.80	2.80
Fixed cost ( Total fixed costs / Units )	6.88	5.24	4.23
Total cost per unit ( Total costs / Units )	9.68	8.04	7.03

Required 2 :
Harris company
Contribution Format Income statement
Sales ( 94000 * 9.04 )	849760
(-) Variable costs ( 94000 * 2.80 )	263200
Contribution margin	586560
(-) Fixed costs	440000
Net income	146560