Exercise 111 Cost Behavior Contribution Format Income Statem

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 54,000 to 94,000 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 84,000 units during the year at a selling price of $9.24 per unit. Prepare a contribution format income statement for the year

Solution

1)Variable cost Remain same in per unit irrespective of unit produced and sold whereas Fixed cost remain same in Total within a relevant range.

2)

Unit produced and sold
	54000	74000	94000
Total cost
variable cost	167400	229400     [3.1*74000]	291400     [3.1*94000]
Fixed cost	380000	380000	380000
Total cost	547400	609400	671400
costper unit
Variable cost	167400/54000=3.1	3.1	3.1
Fixed cost	380000/54000=7.04	380000/74000=5.14	380000/94000=4.04
Total cost per unit	10.14	8.24	7.14