Herrestad Company ABSORPTION, VARIABLE COSTING and BEP
Question # 00022808
Posted By:
Updated on: 08/12/2014 01:21 PM Due on: 12/31/2015
| Below find production and sales information for Herrestad Company. We will use this same company for the remaining SLPs. | |||
| Product information | |||
| Beginning inventory 0 | |||
| Units produced 10,000 | |||
| Units sold 8,000 | |||
| Selling price per unit $250 | |||
| Variable costs per unit | |||
| Direct material 100 | |||
| Direct labor 50 | |||
| Variable overhead 30 | |||
| Variable selling and administrative 10 | |||
| Fixed costs | |||
| Fixed manufacturing overhead 200,000 | |||
| Fixed selling and administrative 100,000 | |||
| Herrestad Company | |||
| Absorption Income Statement | |||
| For
the period ending Dec. 31, 2011 Required: Prepare a contribution margin (behavioral, variable) income statement for Herrestad Company, compare net operating profit from a contribution margin income statement with net income from an absorption income statement, and explain why this difference happens. Prepare a second version assuming the selling price per unit increases to $270 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 $100 to $130, but all information remains the same. |
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Rating:
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Solution: Herrestad Company ABSORPTION, VARIABLE COSTING and BEP