Question

Exercise 1-11 Cost Behavior; Contribution Format Income Statement [LO1-4, LO1-6] 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 50,000 to 90,000 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 80,000 units during the year at a selling price of $10.49 per unit Prepare a contribution format income statement for the year Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the schedule of the company's total costs and costs per unit as given in the relevant tab below. (Round the per unit variable cost and fixed cost to 2 decimal places.) Units Produced and sold 50,000 70,000 90,000 Total costs Variable cost $ Fored cost Total costs Cost per unit 160,000 440,000 600,000 $ Variable cost Fored cost Total cost per unit Required 2 >

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Answer 1

1)

	Units Produced and Sold
	50000	70000	90000
Total costs:
Variable cost	$160000	($3.20*70000)= $224000	($3.20*90000)= $288000
Fixed cost	440000	440000	440000
Total cost	$600000	$664000	$728000
Cost per unit
Variable cost	(160000/50000)= $3.20	$3.20	$3.20
Fixed cost	(440000/50000)= 8.80	(440000/70000)= 6.29	(440000/90000)= 4.89
Total cost per unit	$12	$9.49	$8.09

Harris Company
Contribution Format Income Statement
Sales (80000*$10.49)	$839200
Less: Variable costs (80000*$3.20)	-256000
Contribution margin	583200
Less: Fixed costs	-440000
Operating income	$143200

2) Calculation of Direct cost of Cosmetics department

Cosmetics department sales commissions- Northridge store	$5740
Add: Cosmetics department cost of sales- Northridge store	33300
Add: Cosmetics department manager's salary- Northridge store	4870
Direct cost of the Cosmetics department	$43910

So, the answer is option B) $43910

3) Calculation of Total product cost

Direct materials	$113000
Utilities, factory	5000
Indirect labor	25000
Depreciation of production equipment	20000
Direct labor	129000
Total product cost	$292000

So, the answer is option A) $292000

4) Direct manufacturing cost= Direct materials+Direct labor

= ($6.30+3.65)*8000= $79600

So, the answer is option A) $79600