Herrestad Company contribution margin (behavioral, variable)
Not what you're looking for?
I have no idea how this thing works. Could really use some to tell me how to makes the numbers make sense.
Below find production and sales information for Herrestad Company.
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. Prepare a second version assuming the selling price per unit increases to $280 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 $120, 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.
Purchase this Solution
Solution Summary
Your tutorial is attached in Excel which gives you the contribution margin income statement using variable costing (treats fixed manufacturing overhead as period cost). Breakeven formula for original data and revised material costs are shown and worked. As an illustration, a traditional multi-step income statement with gross profit computed is also shown for original data and the price change.
Solution Preview
Your tutorial is attached in Excel which gives you the ...
Education
- BSc, University of Virginia
- MSc, University of Virginia
- PhD, Georgia State University
Recent Feedback
- "hey just wanted to know if you used 0% for the risk free rate and if you didn't if you could adjust it please and thank you "
- "Thank, this is more clear to me now."
- "Awesome job! "
- "ty"
- "Great Analysis, thank you so much"
Purchase this Solution
Free BrainMass Quizzes
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Basics of corporate finance
These questions will test you on your knowledge of finance.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.