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# Behavioral, variable, income statement for Lewis Company

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We're using a different fictitious company for the last two modules, the managerial accounting portion of this course. Below find production and sales information for Lewis Company.

(see attached for data on Lewis Company)

Required:

Prepare a contribution margin (behavioral, variable) income statement for Lewis 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.

Modular SLP Expectations

It is important to answer the questions as posed. The document should be two to four pages and written in a clear and concise manner or present tables as required. Support your discussion or tables with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved. You can turn in the spreadsheet instead. The content should be equivalent to the page length suggested for a word processing document.

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#### Solution Summary

Your tutorial is in Excel (attached). Please click in cells to see computations. A draft report (334 words including computations as exhibits) as a sample is available for your inspection and as a starting point for your final work.

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## Managerial Accounting - Variable Costing

We're using a different fictitious company for the last two modules, the managerial accounting portion of this course. Below find production and sales information for Lewis Company.
Product information Prod B

Beginning inventory 0
Units produced 10,000
Units sold 9,000

Selling price per unit \$300
Variable costs per unit
Direct material 120
Direct labor 60
Variable selling and administrative 10

Fixed costs
Fixed manufacturing overhead 250,000
Fixed selling and administrative 100,000

Lewis Company
Absorption Income Statement
For the period ending Dec. 31, 2012

Sales \$2,700,000
Cost of goods sold 2,205,000
Gross profit (margin) \$495,000
Selling and administrative expenses 180,000
Net income \$315,000

Required:
Prepare a contribution margin (behavioral, variable) income statement for Lewis 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.

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