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 67,000 to 107,000 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 97,000 units during the year at a selling price of $9.17 per unit. Prepare a contribution format income statement for the year.

Answer 1

Explanation: A: Schedule

$ $ $

Total cost:

Units 67000 87000 107000

Variable Cost 254600 330600(87000*3.8) 406600(107000*3.8)

Fixed cost 380000 380000 380000

Total cost 634600 710600 786600

Cost per unit:

Variable cost 3.8 3.8 3.8

Fixed cost 5.67 4.37 3.55

Total cost per unit 9.47 8.17 7.35

B: Contribution Format Income statement

$

Sales Revenue($97000*$9.17) = 889490

Variable Cost($97000*$3.8) = ( 368600)

Contribution Margin = 520890

Fixed Cost = (380000)

Operating Income = 140890