1. Lynch Company manufactures and sells a single product. The following costs were incurred during the companys first year of operations:

Variable costs per unit:
Manufacturing:
Direct materials	$	12
Direct labor	$	7
Variable manufacturing overhead	$	2
Variable selling and administrative	$	2
Fixed costs per year:
Fixed manufacturing overhead	$	248,000
Fixed selling and administrative	$	158,000

During the year, the company produced 31,000 units and sold 21,000 units. The selling price of the companys product is $44 per unit.

2. Lucido Products markets two computer games: Claimjumper and Makeover. A contribution format income statement for a recent month for the two games appears below:

	Claimjumper				Makeover			Total
Sales	$	98,000			$	49,000		$	147,000
Variable expenses		24,520				4,880			29,400
Contribution margin	$	73,480			$	44,120			117,600
Fixed expenses									94,320
Net operating income								$	23,280

Required:

1. What is the overall contribution margin (CM) ratio for the company?

2. What is the company's overall break-even point in dollar sales?

3. Prepare a contribution format income statement at the company's break-even point that shows the appropriate levels of sales for the two products.

Required:

1. Assume that the company uses absorption costing:

a. Compute the unit product cost.

b. Prepare an income statement for the year.

2. Assume that the company uses variable costing:

a. Compute the unit product cost.

b. Prepare an income statement for the year.

3. Miller Companys contribution format income statement for the most recent month is shown below:

	Total			Per Unit
Sales (37,000 units)	$	222,000		$	6.00
Variable expenses		111,000			3.00
Contribution margin		111,000		$	3.00
Fixed expenses		41,000
Net operating income	$	70,000

Required:

(Consider each case independently):

1. What is the revised net operating income if unit sales increase by 12%?

2. What is the revised net operating income if the selling price decreases by $1.30 per unit and the number of units sold increases by 15%?

3. What is the revised net operating income if the selling price increases by $1.30 per unit, fixed expenses increase by $6,000, and the number of units sold decreases by 7%?

4. What is the revised net operating income if the selling price per unit increases by 10%, variable expenses increase by 30 cents per unit, and the number of units sold decreases by 5%?

Req 1A Reg 1B Req 2A Req 2B Prepare an income statement for the year. Assume that the company uses variable costing Lynch Company Variable Costing Income Statement 0 0 0 0