Income Statement, Break-Even Units, Units to Earn Target Income Melford Company sold 26,800 units last year at $16.00 each. Variable cost was $11.50, and total fixed cost was $126,000. Required: 1. Prepare an income statement for Melford for last year. 2. Calculate the break-even point in units. 3. Calculate the units that Melford must sell to earn operating income of $12,150 next year.
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.
Income Statement, Break-Even Units, Units to Earn Target Income Melford Company sold 26,800 units last year at $16.00 each. Variable cost was $11.50, and total fixed cost was $126,000.
Required:
1. Prepare an income statement for Melford for last year.
2. Calculate the break-even point in units.
3. Calculate the units that Melford must sell to earn operating income of $12,150 next year.
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