Problem 8-17 Variable and Absorption Costing Unit Product Costs and Income Statements (LO1, LO2, LO3, LO4] Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Variable cost per unit: Manufacturing: Direct materials Direct labour Variable manufacturing overhead Variable selling and administrative Fixed costs per year: Fixed manufacturing overhead Fixed selling and administrative expenses A A A A 21 13 8 1 $600,000 $240,000 During its first year of operations, Haas produced 60,000 units and sold 60,000 units. During its second year of operations, it produced 75,000 units and sold 50,000 units. In its third year, Haas produced 40,000 units and sold 65,000 units. The selling price of the company's product is $57 per unit. Required: 1. Compute the company's break-even point in units sold. Break-even unit sales 56,000 units 2. Assume the company uses variable costing: a. Compute unit product costs for Year 1, Year 2, and Year 3. Year 1 Year 2 Year 3 Unit product cost $ 42 $ 42 $ 42 b. Prepare an income statement for year 1, year 2, and year 3. Haas Company Variable Costing Income Statement Year 1 Year 2 Year 3 Sales $ 3,420,000 $ 2,850,000 $ 3,705,000 Variable expenses: Variable cost of goods sold 2,850,000 2,520,000 60,000 Variable selling and administrative 50,000 3,705,000 65,000 3,770,000 (65,000) Total variable expenses 2,900,000 2,580,000 840,000 Contribution margin (50,000) Fixed expenses: 600,000 600,000 Fixed manufacturing overhead Fixed selling and administrative expenses 600,000 240,000 840,000 240,000 240,000 Total fixed expenses: 840,000 840,000 Net operating income (loss) $ 0 (890,000) $ (905,000) 3. Assume the company uses absorption costing: a. Compute unit product costs for Year 1, Year 2, and Year 3. (Round your intermediate and final answers to 2 decimal places.) 2 decimal places required. Year 1 Unit product cost $ 52.00 $ 50.00 $ 57.00 b. Prepare an income statement for year 1, year 2, and year 3. (Round your intermediate calculations to 2 decimal places.) Haas Company Absorption Costing Income Statement Year 1 Year 2 Year 3 Sales $ 3,420,000 $ 2,850,000 $ 3,705,000 2,500,000 3,705,000 3,120,000 300,000 350,000 0 Cost of goods sold Gross margin Selling and administrative expenses Net operating income (loss) 300,000 290,000 60,000 $ 305,000 (305,000) $ 0 $