Question

Harris Company manufactures and sells a single product. A partially completed schedule of the company’s total costs and costs per unit over the relevant range of 52,000 to 92,000 units is given below:

Required:

1. Complete the schedule of the company’s total costs and costs per unit as given in the relevant tab below.

2. Assume that the company produces and sells 82,000 units during the year at a selling price of $9.89 per unit. Prepare a contribution format income statement for the year.

	Units Produced and Sold
	52,000	72,000	92,000
Total costs:
Variable costs	$130,000
Fixed costs	460,000	460,000	460,000
Total costs	$590,000	$460,000	$460,000
Cost per unit:
Variable cost
Fixed cost
Total cost per unit

Answer 1

	Units Produced and Sold
	52,000	72,000	92,000
Total costs:
Variable costs	$130,000	$180,000	$230,000
Fixed costs	460,000	460,000	460,000
Total costs	$590,000	$640,000	$690,000
Cost per unit:
Variable cost	$2.5	$2.5	$2.5
Fixed cost	$8.85(approx)	6.39(approx)	$5
Total cost per unit	$11.35	$8.89	$7.5

NOTE:Total fixed cost and variable cost/unit do not change with change in units.

Sales revenue(82000*9.89)	$810,980
Variable cos(82000*2.5)	$205000
Contribution margin	$605980
Fixed Costs	$460,000
Net income	$145980