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.

Posted Date: 3/23/2013 1:44:00 AM | Location : United States

Ask an Expert

Related Discussions:- Compute break even assuming direct materials cost, Assignment Help, Ask Question on Compute break even assuming direct materials cost, Get Answer, Expert's Help, Compute break even assuming direct materials cost Discussions

Write discussion on Compute break even assuming direct materials cost
Your posts are moderated

Write your message here..

Related Questions

Cost book keeping, WHAT IS COST BOOK KEEPING? WHAT IS COST BOOK KEEPING?

Marginal and absorption cost, worked examples of marginal and absorption co... worked examples of marginal and absorption cost

Definition of variance analysis, Definition of Variance Analysis Varia... Definition of Variance Analysis Variance analysis can merely be defined like the process of analyzing the difference between the actual cost and the standard cost this variati

What is callable preferred stock, What is callable preferred stock? Why do ... What is callable preferred stock? Why do corporations issue such stock? Given the different features that are associated with stock (callable, cumulative, preferred, etc.), what ty

Elements of cost, Elements of Cost Nearly there are three elements of c... Elements of Cost Nearly there are three elements of cost - labor, material, and expenses. These are additional divided into indirect and direct material, indirect and direct la

Determine the customer inter-arrival time, During the dinner hour, the dist... During the dinner hour, the distribution of the inter-arrival time of customers at Burger Barn is predictable to be as follows: Inter-arrival Time Probabi

Explain how individual items of costs will be traced, Glaser Health Product... Glaser Health Products of Ranier Falls, Georgia, is organized functionally into three divisions: Operations, Sales, and Administrative. Purchasing, receiving, materials and product

Example of flexible and fixed budget, Example of Flexible and Fixed Budget ... Example of Flexible and Fixed Budget A company has budgeted to produce and sell 100,000 units of cakes throughout the next period. The selling price per cake is Sh. 20 and var

Insurance of trust property-trust laws, INSURANCE Trustees may insure t... INSURANCE Trustees may insure trust property against loss or damage by fire subject to the following conditions:   1. The insurance must not exceed the full value of the proper

Example of economic order quantity, Example of Economic Order Quantity ... Example of Economic Order Quantity The EOQ model supposes : - Annual demand is recognized - Hold costs are constant and recognized - Ordering costs are recognized a