## Compute break even assuming direct materials cost, Cost Accounting

Assignment Help:

Below find production and sales information for Herrestad Company. We will use this same company for all the SLPs in this course.

 Product information Beginning inventory 0 Units produced 10,000 Units sold 8,000 Selling price per unit \$300 Variable costs per unit Direct material 120 Direct labor 60 Variable overhead 40 Variable selling and administrative 10 Fixed costs Fixed manufacturing overhead 250,000 Fixed selling and administrative 100,000
 Herrestad Company Absorption Income Statement For the period ending Dec. 31, 2011 Sales \$2,400,000 Cost of goods sold 1,960,000 Gross profit (margin) \$440,000 Selling and administrative expenses 180,000 Net income \$260,000

Required:

Prepare a contribution margin (behavioral, variable) income statement for Herrestad Company. Prepare a second version assuming the selling price per unit increases to \$320 per unit.

Use the original information to:

• Determine the number of units the company must sell to break even for the year?
• Compute break even assuming direct materials cost increase from \$120 to \$140, but all information remains the same.

The submission should be 2 to 4 pages and need to include answers to all the questions listed above. Show computations, discuss the results and include references in APA format.

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