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Picnic Time produces a picnic basket that is sold for $ 1 0 0 per unit. Assume the company produced and sold 4 , 0

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 Cost per Unit Fixed Costs per Month

Manufacturing: Manufacturing overhead $36,000

Direct materials. $25 Selling and administrative 68,000

Direct labor 15 Total $104,000

Manufacturing overhead 5 $45

Selling and administrative 4

Total $49

b. Determine the break-even point in sales dollars.

Note: Do not round intermediate calculations

Note: Round up to the nearest dollar, enter $80 for $79.2

$Answer

c. Suppose the cost of labor is expected to increase next year. How will this affect the

break-even point?

Break-even point will Answer

d. Determine July's margin of safety in sales dollars.

$Answer

e. What dollar sales volume is currently required to obtain a before-tax profit of $120,000?

Note: Do not round intermediate calculations

Note: Round up to the nearest dollar, enter $80 for $79.2

$Answer


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