Haas Company manufactures and sells one product. The following information pertains to each of the company’s...
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Accounting
Haas Company manufactures and sells one product. The followinginformation pertains to each of the company’s first three years ofoperations:
Variable costs per unit: Manufacturing: Direct materials $ 29 Direct labor $ 21 Variable manufacturing overhead $ 9 Variable selling and administrative $ 3 Fixed costs per year: Fixed manufacturing overhead $ 420,000 Fixed selling and administrative expenses $ 180,000
During its first year of operations, Haas produced 60,000 unitsand sold 60,000 units. During its second year of operations, itproduced 75,000 units and sold 50,000 units. In its third year,Haas produced 40,000 units and sold 65,000 units. The selling priceof the company’s product is $72 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 Year3.
b. Prepare an income statement for Year 1, Year 2, and Year3.
3. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1, Year 2, and Year3.
b. Prepare an income statement for Year 1, Year 2, and Year3.
Haas Company manufactures and sells one product. The followinginformation pertains to each of the company’s first three years ofoperations:
| Variable costs per unit: | ||
| Manufacturing: | ||
| Direct materials | $ | 29 |
| Direct labor | $ | 21 |
| Variable manufacturing overhead | $ | 9 |
| Variable selling and administrative | $ | 3 |
| Fixed costs per year: | ||
| Fixed manufacturing overhead | $ | 420,000 |
| Fixed selling and administrative expenses | $ | 180,000 |
During its first year of operations, Haas produced 60,000 unitsand sold 60,000 units. During its second year of operations, itproduced 75,000 units and sold 50,000 units. In its third year,Haas produced 40,000 units and sold 65,000 units. The selling priceof the company’s product is $72 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 Year3.
b. Prepare an income statement for Year 1, Year 2, and Year3.
3. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1, Year 2, and Year3.
b. Prepare an income statement for Year 1, Year 2, and Year3.
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