Question

Parker Company manufactures and sells a single product.

Required:
1.
A partially completed schedule of the company's total and per unit costs over a relevant range of 60,000 to 100,000 units produced and sold each year is given below. Complete the schedule of the company's total and unit costs. (Round the "Cost per unit" to 2 decimal places. Omit the "$" sign in your response.)

Units Produced and Sold
60,000 80,000 100,000
Total costs:
Variable costs $ 150,000 $
200,000
$
250,000

Fixed costs 360,000
360,000

360,000

Total costs $ 510,000 $
560,000
$
610,000

Cost per unit:
Variable cost $
2.50
$
2.50
$
2.50

Fixed cost
6.00

4.50

3.60

Total cost per unit $
8.50
$
7.00
$
6.10

Answer 1

Parker Company Manufacturers

Units Produced Sold

60,000 80,000 100,000

Total Costs

Variable Costs $ 150,000 $ 200,000 $ 250,000

Fixed Costs $ 360,000 $ 360,000 $ 360,000

Total Costs $ 510,000 $ 560,000 $ 610,000

Cost Per Unit

Variable Cost $ 2.50 2.50 2.50

Fixed Cost $ 6.0 4.5 3.60

Total Cost $ 8.5 7.0 6.10

Parker Company Manufacturers

Income Statement

Sales ( 100,000 @ 6.10) (assuming CP= SP) $ 610,000

Less Variable Expenses

(100,000 @ 2.5) $ 250,000

Contribution Margin $ 360,000

Less Fixed Expenses $ 360,000

Net Income