Problem:
A company had the following results for the past year:
Units produced 50,000
Units sold 55,000
Direct materials $650,000
Direct labor $500,000
Variable overhead $400,000
Fixed overhead $450,000
Variable selling expenses $110,000
Fixed selling expenses $150,000
There are no work in process inventories, and the beginning finished goods inventory was 10,000 units. Normal activity is 50,000 units. All costs were as budgeted; costs have not changed over the year. The sales price averaged $60 per unit.
Questions to answer:
Q1. What is this company’s break even sales point (in units).?
Q2. What does this company’s absorption costing income statement look like?
Q3. What does this company’s variable costing income statement look like?