1 2 Problem 7-18 Part 1. Variable vs Absorption Costing (from p.321) Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: 1 5 Selling price per unit 58 6 31 Year 1 60.000 60,000 Production in units) Sales in units Erding to Year 2 75,000 50,000 25.000 Year 40,000 05,000 9 10 12 Fixed Costs in total ed manufacturing overhead Fixed selline administrative 5960,000 5240.000 Variable costs per unit bir materials Direct labor 5 Variable overhead Variable san 90.00 12.00 14 200 Variable Costing Compute the unit product costs for Year 1 Year 2 nd Your What is the braven point in unita? 12 10 19 20 21 22 Y reakeven unit Ditmaterial Direclution Year 10.003 12.00 TFC CM per unit 20003 12.05 Year 20.010 12.00 Prom13 H 2.00 Variable SA Variable Costing Compute the unit product costs for Year 1 Year 2 and Year What is the breakeven point in unitas? Breakeven (units) TFC CM per unit $ 0 21 22 23 20 21 Direct materials borech labor Variable MOH Variables unit product cost Year1 20.00 $ 12.00 5 100$ 36.00 $ Year 2 20.00 12.00 5 300 56.00 5 Years 20.00 12.00 00 36.00 Breakeven (units) $ Prepare an income statement for Year 1 Year and Years Breakeven (units) 27 20 Year 2 Year Year 000 10 30 33 Variable expen Vanco Variable SSA Total van expenses Contribution Man Feves Fred ML FOSCA Total de Open Income 35 Explain the difference between variable coating and absorption costin NOI Year: Year 2 Year Units in beginning inventory - units produced units sold units in ending inventory 1 S 5 $ 36 2 33 2 4 Variable Cocs Variable SA Total variable expenses Contribution Marin Fixed expenses Fixed MOH SA Totalfwed expenses Net Operating Income Explain the difference between variable costing and absorption costing NOI Year 1 Year 2 Year Units in beginning inventory units produced 1 units sold unitsin ending inventory 30 37 311 39 40 For costsin ending inventory FOH in begin FOR deferred in inventory or released from inventory 42 Absorption Costing Compute the unit product costs for Your 1 Year 2 nd Year deferred in Inventory Your Year Yew Deretter Direct labor Variable MOH Variable NOI Add FOH deferred in in FOR released from in Absorption costing NO Vanuit ut cost 0 5 Compare the net operating incomes that you computed to the braven point in unit sales which Nom countrittive? Why? Procesamento Ya Year 2 nd Year Voor Year A Mi 5 - 9 9 Any 10 M M D E B Compute the unit product costs for Year 1. Year 2 nd Year 3. G or released from inventory deferred in inventory 43 44 45 45 Year! Year 2 Year Variable NOI Add: FOH deferred in inv. Less FOH released from in Atorption contin NOI materials Duct labor Variable MOH F MOH DET Variable unit product cost 4 40 50 151 52 53 54 55 Compare the net operating incomes that you computed to the breakeven point in unit sales. Which Nos sem counterintuitive? Why? Prepare an income statement for Year 1 Year 2, and Year Your 1 Year 2 Year 57 Sale Tools Cross SBA Lepene Open COGS For YILI Cok of unitsind this year Continentory that are sold