Question

Harris Company manufactures and sells a single product. Required 1. A partially completed schedule of the company's total and per unit costs over the relevant range of 30,000 to 50,000 units produced and sold annually is given below. Complete the schedule of the company's total and unit costs. (Round the per unit variable cost and fixed cost to 2 decimal places.) Units Produced and Sold 30,000 40,000 50,000 Total costs Variable costs $ 180,000 Fixed costs 300,000 Total costs $ 480,000$ Cost per unit: Variable cost Fixed cost Total cost per unit 0.00 0.00 0.00 2. Assume that the company produces and sells 45,000 units during the year at a selling price of $16 per unit. Prepare a contribution format income statement for the year Harris Company Contribution Format Income Statement

Answer 1

Answers

• All working forms part of the answer
• Requirement 1

Units produced and sold	30,000	40,000	50,000
Total costs:
Variable costs	$              180,000	$             240,000 [40000 x $6]	$            300,000 [50000 x $6]
Fixed costs	$              300,000	$             300,000	$            300,000
Total costs	$              480,000	$             540,000	$            600,000
Cost per unit:
Variable cost	$                     6.00 [180000/30000]	$                    6.00	$                   6.00
Fixed cost	$                   10.00	$                    7.50	$                   6.00
Total cost per unit	$                   16.00	$                 13.50	$                 12.00

--Variable cost per unit stays the same.
--Fixed cost in total remains the same.

• Requirement 2

A	Sales revenue [45000 units x $ 16]	$              720,000
B	Variable cost [45000 units x $ 6]	$              270,000
C = A - B	Contribution margin	$              450,000
D	Fixed Cost	$              300,000
E = C - D	Net [Operating] Income	$              150,000