Variable Costing

SEE ATTACHMENT

Prepare a contribution margin (behavioral, variable) income statement for Lewis 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 $330 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 $120 to $150, but all information remains the same.