Posted: August 4th, 2016

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

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 0 Variable costs per unit Direct material 120 Direct labor 60 Variable overhead 40 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, 2015 Sales $2,700,000 Cost of goods sold 2,205,000 Gross profit (margin) $495,000 Selling and administrative expenses 190,000 Net income $305,000 Prepare a contribution margin (behavioral, variable) income statement for Lewis 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 $320 per unit. Further, answer break even questions below. 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 $150, but all information remains the same. SLP Assignment 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.