Problem 6-18 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] 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 Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 210,000 $ 150,000 $ 28 $ 20 $4 53 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 $61 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.
Problem 6-18 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] 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 Direct labor Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses $ 210,000 $ 150,000 $ 28 $ 20 $4 53 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 $61 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
Problem 1Q
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![Problem 6-18 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1,
LO6-2]
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.
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Fixed costs per year:
Fixed manufacturing overhead -
Fixed selling and administrative expenses
Required:
1. Compute the company's break-even point in unit sales.
$ 210,000
$ 150,000
During its first year of operations, Háas 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 $61 per unit.
$28
$ 20
$4
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3df61de3-ee09-41ef-8873-9f950e8ed1d8%2Ffbd35972-2a60-4337-92b9-1fea353f2ef0%2Fu8mlk3_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 6-18 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1,
LO6-2]
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.
Direct labor
Variable manufacturing overhead
Variable selling and administrative
Fixed costs per year:
Fixed manufacturing overhead -
Fixed selling and administrative expenses
Required:
1. Compute the company's break-even point in unit sales.
$ 210,000
$ 150,000
During its first year of operations, Háas 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 $61 per unit.
$28
$ 20
$4
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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