Problem:
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.
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Product information
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Beginning Inventory
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0
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Units produced
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10,000
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Units sold
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9,000
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Selling price per unit
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$300
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Variable costs per unit
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Direct material
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120
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Direct labor
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60
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Variable overhead
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40
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Variable selling and administrative
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10
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Fixed costs
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_
250,000_
100,000
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Fixed manufacturing overhead Fixed selling and administrative
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Lewis Company
Absorption income Statement
For the period ending Dec. 31, 2012
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Sales
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$2,400,000
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Cost of goods sold
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1.960,000
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Gross profit (margin)
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5440,000
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Selling and administrative expenses
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180.000
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Net income
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S260.000
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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 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.