trident acc202 module 3 SLP latest july 2016

| June 14, 2018

Module 3 – SLP

VARIABLE AND FIXED COSTS
Below find production and sales information for Herrestad
Company. We will use this same company for Module 4.

Product Information

Beginning inventory 0
Units produced $10,000
Units sold $8,000

Selling price per unit $250
Variable costs per unit

Direct material $100
Direct labor $50
Variable overhead $30
Variable selling and administrative $10

Fixed costs
Fixed manufacturing overhead $200,000
Fixed selling and administrative $100,000

Herrestad company
Absorption income statement
for the period ending Dec. 31, 2015

Sales $2,000,000
Costs of goods sold $1,600,000
Gross profit (margin) $400,000
Selling and administrative expenses $180,000
Net income $220,000
Required:

Prepare a contribution margin (behavioral, variable) income
statement for Herrestad Company, compare net operating profit from a
contribution margin income statement with net income from an absorption income
statement, and explain why this difference happens. Prepare a second version
assuming the selling price per unit increases to $270 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 $100 to $130, but all information remains the same.
The submission should be 2 to 4 pages and needs to include
answers to all the questions listed above. Show computations, discuss the
results, and include references in APA format.

SLP Assignment Expectations
It is important to answer the questions above. The
discussion should be two to four pages and written in a clear and concise
manner. Support your discussion with references in APA format. You are
encouraged to use Excel or other compatible spreadsheet when computations are
involved.

When your paper is done, upload it to the appropriate
dropbox.

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