JAN:)V PART 2
wyatsmBelow 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 | |
Sales | $2,000,000 |
Cost of goods sold | 1,600,000 |
Gross profit (margin) | $400,000 |
Selling and administrative expenses | 180,000 |
Net income | $220,000 |
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.
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.
12 years ago
10
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part_2.docx- part_2_answer.xlsx
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