Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 6-18 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2] Haas Company manufactures and sells one product. The following information

Problem 6-18 (Algo) Variable and Absorption Costing Unit Product Costs and Income Statements [LO6-1, LO6-2]

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

Variable costs per unit: Manufacturing: Direct materials$ 21Direct labor$ 13Variable manufacturing overhead$ 4Variable selling and administrative$ 2Fixed costs per year: Fixed manufacturing overhead$ 330,000Fixed 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 companys product is $52 per unit.

Required:

1. Compute the companys 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 Year 3.

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

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Modern Internal Auditing An Operational Approach

Authors: Victor Zinn Brink

3rd Edition

0471065242, 978-0471065241

More Books

Students also viewed these Accounting questions