Variable and absorption costing, and breakeven points. LO Tammy Cat Tree CoTCTC builds luxury cat trees and sells them through the internet to cat owners who want to provide their cats with a more natural environment. At the start of the year, TCTC carried no inventory. During the year, it produced cat trees and sold cat trees for $ each. Fixed production costs were $ and variable production costs were $ per cat tree. Fixed advertising, website, and other general and administrative expenses were $ and variable shipping costs were $ per tree.
Required
Prepare an operating statement of comprehensive income assuming TCTC uses
a Variable costing
b Absorption costing
Compute the breakeven point in units assuming TCTC uses
a Variable costing
b Absorption costing
Due to recent changes in local conservation laws, the price of the wood used in the cat trees is expected to increase by $ for each tree. What effect would this have on the breakeven points calculated above?
Using the original data in the problem and the breakeventarget income formulas, show that it would be necessary to sell cat trees to earn the income calculated in requirements a and above.
Please answer all questions.
