Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 21 Direct labor $ 13 Variable manufacturing overhead $ 8 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 600,000 Fixed selling and administrative expenses $ 240,000 During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company's product is $57 per unit. Required: 1. Compute the company's break-even point in unit sales. 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3.
Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable costs per unit: Manufacturing: Direct materials $ 21 Direct labor $ 13 Variable manufacturing overhead $ 8 Variable selling and administrative $ 1 Fixed costs per year: Fixed manufacturing overhead $ 600,000 Fixed selling and administrative expenses $ 240,000 During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company's product is $57 per unit. Required: 1. Compute the company's break-even point in unit sales. 2. Assume the company uses variable costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3. 3. Assume the company uses absorption costing: a. Compute the unit product cost for Year 1, Year 2, and Year 3. b. Prepare an income statement for Year 1, Year 2, and Year 3.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Haas Company manufactures and sells one
product. The following information pertains
to each of the company's first three years
of operations: Variable costs per unit:
Manufacturing: Direct materials $ 21 Direct
labor $13 Variable manufacturing
overhead $8 Variable selling and
administrative $ 1 Fixed costs per year:
Fixed manufacturing overhead $ 600,000
Fixed selling and administrative expenses $
240,000 During its first year of operations,
Haas produced 60,000 units and sold
60,000 units. During its second year of
operations, it produced 75,000 units and
sold 50,000 units. In its third year, Haas
produced 40,000 units and sold 65,000
units. The selling price of the company's
product is $57 per unit. Required: 1.
Compute the company's break-even point
in unit sales. 2. Assume the company uses
variable costing: a. Compute the unit
product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1,
Year 2, and Year 3. 3. Assume the company
uses absorption costing: a. Compute the
unit product cost for Year 1, Year 2, and
Year 3. b. Prepare an income statement for
Year 1, Year 2, and Year 3.
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Step 1: Define Income statement
VIEWStep 2: Computation of Company Break-even point in unit sales is as follows:
VIEWStep 3: Computation of Unit product cost is as follows:
VIEWStep 4: Preparation of Income Statement
VIEWStep 5: Computation of Unit product cost is as follows
VIEWStep 6: Preparation of Income Statement
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