E16-17.Contribution Income Statement and Cost-Volume-Profit Graph Picnic Time produces a picnic basket that is sold for $100
Question:
E16-17.Contribution Income Statement and Cost-Volume-Profit Graph Picnic Time produces a picnic basket that is sold for $100 per unit. Assume the company produced and sold 4,000 baskets during July. There were no beginning or ending inventories. Variable and fixed costs follow:
Variable Costs per Unit Fixed Costs per Month
Manufacturing:
Direct materials ............... $25
Direct labor .................. 15
Manufacturing overhead ........ 5 $45
Selling and administrative......... 4
Total ......................... $49
Fixed costs per Month
Manufacturing overhead......... $ 36,000
Selling and administrative........ 68,000
Total ........................ $104,000
Required
a. Show a contribution income statement for July.
b. Show a cost-volume-profit graph. Label the horizontal axis in units with a maximum value of 8,000. Label the vertical axis in dollars with a maximum value of $1,000,000. Draw a vertical line on the graph for the current (4,000) unit sales level, and label total variable costs, total fixed costs, and total profits at 4,000 units