Units Produced and Sold 30,000 40,000 50,000 Total costs: Variable cost $180,000 ? ? ... Fixed cost... 300,000 ? Total cost $480,000 ? ? Costs per unit: Variable cost ? ? Fixed cost.... Total cost per unit ? ? ? ? ?
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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 30,000 to 50,000 units is given below:
Required:
1. Complete the above schedule of the company’s total costs and costs per unit.
2. Assume that the company produces and sells 45,000 units during the year at a selling price of $16 per unit. Prepare a contribution format income statement for the year.
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