AccuMeter manufactures and sells its only product (Z1) in lot sizes of 500 units. Because of this approach, lot (batch)-level costs are regarded as variable for CVP analysis. Presented is sales and cost information for the year 2017:

Required

a. Prepare a traditional contribution income statement in good form.

b. Prepare a multi-level contribution income statement in good form. (Hint: First determine the appropriate cost hierarchy.)

c. What is the current contribution per lot (batch) of 500 units?

d. Management is contemplating introducing a limited number of specialty products. One product would sell for \($65\) per unit and have direct materials costs of \($17\) per unit. All other costs and all production and sales procedures will remain unchanged. What lot (batch) size is required for a contribution of \($700\) per lot?

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Sales revenue (50,000 units at $45). Direct materials (50,000 units at $12). Processing (50,000 units at $18). Setup (100 lots at $2,000) Batch movement (100 lots at $400). Order filling (100 lots at $200) Fixed manufacturing overhead. Fixed selling and administrative. $2,250,000 600,000 900,000 200,000 40,000 20,000 800,000 300,000