Play and Stay Manufacturing(P&S) has a factory that produces cabinetry for the RV and marine market. The company has other product lines. Materials and labor for the cabinets are determined by each job. To simplify the assignment, we will assume the following average costs The following information highlights P&S Manufacturing's cost structure for 2020.

The materials include $2,800 for the wood and other materials on a per job basis.

It requires 24 hours of labor on average for the cabinetry. The hourly rate is $11.

The sales price will be set at a markup of 80%.

The company estimates that it will have 43,200 direct labor hours in total for the cabinets.

It assumes 1800 units are sold on average per year.

A breakdown of estimated yearly costs related to the cabinetry follows:

Salaries- office & administrative $ 500,000

Salaries for factory personal $ 350,000

Office Rent $ 150,000

Factory Rent $ 30,000

Office utilities and Misc office expenses(based on units sold) $ 15,000

Sales travel(based on units sold) $ 24,000

Insurance - office $ 12,000

Depreciation - office equipment $ 40,000

Depreciation for factory equipment $ 70,000

Advertising $ 20,000

Sales commissions(based on units sold) $ 50,000

Factory Property taxes $ 25,000

Maintenance for factory equipment $ 80,000

1. Prepare three CVP Income Statements using the following yearly volumes: 1,200, 1,800 and 2,500. Keep in mind how variable and fixed costs behave. The traditional income statement from #5 should be about the same net income as the 1,800 units for the CVP format. In addition, Q1, should agree to the total fixed costs and per unit variable costs for these schedules.

Play and Stay Manufacturing (P&S)

Traditional Income Statement

Sales $10,926,360

Cost of goods sold $6,070,200

Gross profit on sales $4,856,160

Operating expenses:

Wage Expenses (Salaries - Office & Administrative) $500,000

Rent Expenses (Office Rent) $150,000

Depreciation Expenses (Office equipment) $40,000

Selling Expenses (Advertising ) $20,000

Insurance - Office $12,000

Total Operating Expenses $722,000

Net Income $4,134,160

a) Calculate Break-even in units and sales $ for the company

b) Calculate units and sales $ if the company wants a profit of $5,000,000.

c) Margin of safety in dollars for 1,800 units.