Question

Your Company manufactures and sells one product. The sellingprice per unit is $80 per unit. The following pertains to thecompany's first year of operations in which it produced 40,000 andsold 35,000 units.

Variable costs:
Manufacturing:
Direct materials	960,000
Direct labor	560,000
Variable manufacturing overhead	80,000
Variable selling	140,000
Fixed Costs per year:
Fixed manufacturing	840,000
Fixed selling and administrative	490,000
Instructions:
1.Using the above information prepare
an income statement in the traditional
format.
2. Prepare an income statement in the
contribution format.
3. Compute the unit cost under absorption costing.
4. Compute the unit cost under variable costing.
5. Compute the contribution margin per unit.
6. Compute the contribution margin ratio
7. There is a difference in the net income using one
statement versus the other; explain the
cause of the difference?
8. Compute the breakeven sales in units 9. Compute the breakeven sales dollars.