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Problem $7-18$ Variable and Absorption Costing Unit Product Costs and Income Statements $[$LO$7-1,$ LO$7.2]$

$5$

points

Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations:

Variable costs per unit:

Manufacturing:

Direct materials: $21$

Direct labor: $13$

Variable manufacturing overhead: $4$

References

Variable selling and administrative: $2$

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Compute the unit product cost for Year $1,$ Year $2,$ and Year $3.$ Assume the company uses variable costing.

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Fixed costs per year:

Fixed manufacturing overhead $$330,000$

Fixed selling and administrative expenses $$150,000$

During its first year of operations, Haas produced $40,000$ units and sold $40,000$ units. During its second year of operations, it produced $55,000$ units and sold $30,000$ units. In its third year, Haas produced $20,000$ units and sold $45,000$ units. The selling price of the company's product is $$52$ per unit.

Required:

Compute the company's break$-$even point in unit sales.

Assume the company uses variable costing:

a$.$ Compute the unit product cost for Year $1,$ Year $2,$ and Year $3.$

b$.$ Prepare an income statement for Year $1,$ Year $2,$ and Year $3.$

Assume the company uses absorption costing:

a$.$ Compute the unit product cost for Year $1,$ Year $2,$ and Year $3.$

b$.$ Prepare an income statement for Year $1,$ Year $2,$ and Year $3.$