Reference no: EM133002969
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 $ 21
Direct labor $ 13
Variable manufacturing overhead $ 4
Variable selling and administrative $ 2
Fixed cost per year:
Fixed manufacturing overhead $ 330,000
Fixed selling and administrative
Expenses $ 150,000
During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year of operations, it produced 55,000 units and sold 30,000 units. In its third year, Haas produced 20,000 units and sold 45,000 units. The selling price of the company's product is $52 per unit.
Required:
Problem 1. Compute the company's break-even point in unit sales.
Problem 2. Assume the company uses variable costing:
a. Compute the unit product cost for Year 1, Year 2, and Year 3.
b. Prepare an income statement for Year 1, Year 2, and Year 3.
Problem 3. Assume the company uses absorption costing:
a. Compute the unit product cost for Year 1, Year 2, and Year 3. (Round your intermediate calculations and final answers to 2 decimal places.)
b. Prepare an income statement for Year 1, Year 2, and Year 3. (Round your intermediate calculations to 2 decimal places.)