Below find production and sales information for Herrestad Company. We will use this same company for all the SLPs in this course.
Selling price per unit
Variable costs per unit
Variable selling and administrative
Fixed manufacturing overhead
Fixed selling and administrative
Absorption Income Statement
For the period ending Dec. 31, 2011
Cost of goods sold
Gross profit (margin)
Selling and administrative expenses
Prepare a contribution margin (behavioral, variable) income statement for Herrestad Company. Prepare a second version assuming the selling price per unit increases to $320 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 $140, but all information remains the same.
This solution includes two prepared absorption costing income statements (when selling price increases). Calculations are provided for break even units with original information and as direct costs per unit increase. This solution is formatted in the attached Excel file.