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$9-39$ Variable and absorption costing, and breakeven points. $($LO $5)$ Tammy Cat Tree Co$.($TCTC$)$ builds luxury cat trees and sells them through the internet to cat owners who want to provide their cats with a more natural environment. At the start of the year, TCTC carried no inventory. During the year, it produced $1,000$ cat trees and sold $800$ cat trees for $$300$ each. Fixed production costs were $$100,000,$ and variable production costs were $$75$ per cat tree. Fixed advertising, website, and other general and administrative expenses were $$50,000,$ and variable shipping costs were $$25$ per tree.

Required

Prepare an operating statement of comprehensive income assuming TCTC uses

a$.$ Variable costing

b$.$ Absorption costing

Compute the breakeven point in units assuming TCTC uses

a$.$ Variable costing

b$.$ Absorption costing

Due to recent changes in local conservation laws, the price of the wood used in the cat trees is expected to increase by $$25$ for each tree. What effect would this have on the breakeven points calculated above?

Using the original data in the problem and the breakeven$/$target income formulas, show that it would be necessary to sell $800$ cat trees to earn the income calculated in requirements $1$a and $1b$ above.

Please answer all questions.

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