"Harris Company manufactures and sells a single product. A partically completed schedule of the company's total and per unit cost over the relevant range of 30,000 to 50,000 per units produced and sold are:
United produced and Sold: 30,000 ; 40,000; 50,000
Total costs:
Variable costs: @ 30,000 = $180,000
Fixed costs: @ 30,000 = 300,000
Total costs: = $480,000
Cost per unit:
Variable costs: @ 30,000 = $6
Fixed costs: @ 30,000 = $10
Total per units costs: @ 30,00 = $16
What are total costs for 40,000 and 50,000?
2. assume that the company produces and sells 45,000 units during the year at a selling price of $16 per unit. prepare a contribution format income statement for the year.
managerial accounting eh? good luck
To calculate the total costs for 40,000 and 50,000 units, we can use the information provided in the partially completed schedule:
For 40,000 units:
Variable costs per unit = $6 (given)
Fixed costs per unit = $10 (given)
Total cost per unit = Variable costs per unit + Fixed costs per unit = $6 + $10 = $16
Total costs for 40,000 units = Total cost per unit * Units produced and sold = $16 * 40,000 = $640,000
For 50,000 units:
Using the same calculation, we can calculate the total costs for 50,000 units:
Total cost per unit = Variable costs per unit + Fixed costs per unit = $6 + $10 = $16
Total costs for 50,000 units = Total cost per unit * Units produced and sold = $16 * 50,000 = $800,000
Now, let's move on to preparing the contribution format income statement for the year, assuming the company produces and sells 45,000 units at a selling price of $16 per unit:
Contribution format income statement for the year:
Units sold = 45,000
Selling price per unit = $16
Total sales = Units sold * Selling price per unit = 45,000 * $16 = $720,000
Total variable costs:
Variable costs per unit = $6 (given)
Total variable costs = Variable costs per unit * Units produced and sold = $6 * 45,000 = $270,000
Contribution margin:
Contribution margin = Total sales - Total variable costs = $720,000 - $270,000 = $450,000
Total fixed costs:
Fixed costs = $300,000 (given)
Operating income (profit):
Operating income = Contribution margin - Total fixed costs = $450,000 - $300,000 = $150,000
Therefore, the contribution format income statement for the year would show:
Total sales: $720,000
Total variable costs: $270,000
Contribution margin: $450,000
Total fixed costs: $300,000
Operating income (profit): $150,000
To calculate the total costs for 40,000 and 50,000 units, we need to determine the variable and fixed costs per unit and then multiply them by the respective number of units produced and sold.
1. Variable costs per unit:
At 30,000 units: $6 per unit
At 40,000 units: We can calculate the variable cost per unit by using the formula:
Variable cost per unit = Total variable costs / Total units produced and sold
Variable cost per unit = $180,000 / 30,000 units = $6 per unit
So, at 40,000 units, the variable costs per unit would still be $6.
2. Fixed costs per unit:
At 30,000 units: $10 per unit
At 40,000 units: We can calculate the fixed cost per unit using the same formula as above:
Fixed cost per unit = Total fixed costs / Total units produced and sold
Fixed cost per unit = $300,000 / 30,000 units = $10 per unit
So, at 40,000 units, the fixed costs per unit would still be $10.
Now we can calculate the total costs for 40,000 units and 50,000 units:
Total costs at 40,000 units = (Variable cost per unit + Fixed cost per unit) * Number of units
Total costs at 40,000 units = ($6 + $10) * 40,000 units
Total costs at 40,000 units = $16 * 40,000 units
Total costs at 40,000 units = $640,000
Total costs at 50,000 units = (Variable cost per unit + Fixed cost per unit) * Number of units
Total costs at 50,000 units = ($6 + $10) * 50,000 units
Total costs at 50,000 units = $16 * 50,000 units
Total costs at 50,000 units = $800,000
Therefore, the total costs for 40,000 units would be $640,000, and for 50,000 units would be $800,000.
Now, let's move on to the second part of your question:
2. Contribution format income statement:
Selling price per unit: $16
Units sold: 45,000
Sales revenue = Selling price per unit * Units sold
Sales revenue = $16 * 45,000
Sales revenue = $720,000
Variable costs for 45,000 units = Variable cost per unit * Units sold
Variable costs for 45,000 units = $6 * 45,000
Variable costs for 45,000 units = $270,000
Contribution margin = Sales revenue - Variable costs
Contribution margin = $720,000 - $270,000
Contribution margin = $450,000
Fixed costs = $300,000
Net income = Contribution margin - Fixed costs
Net income = $450,000 - $300,000
Net income = $150,000
The contribution format income statement for the year would be as follows:
Sales revenue: $720,000
Variable costs: $270,000
Contribution margin: $450,000
Fixed costs: $300,000
Net income: $150,000