Section I: Cost-Volume-Profit Analysis

The REDICO Company manufactures slippers that sell for $12.50 each pair. In 2019, the company made and sold 60,000 pair of slippers. . A pair of slippers equals one unit. The company had fixed manufacturing costs of $216,000. It also had fixed costs for administration of $79,525. The per-unit costs of each pair of slippers are as follows:

Direct Materials: $3.00

Direct Labor: $1.50

Variable Manufacturing Overhead: $0.40

Variable Selling Expenses: $1.10

Using the information above, perform a cost-volume-profit (CVP) analysis by completing the steps below. All CVP calculations should be completed in the REDICO Company Spreadsheet (attached).

The information below represents the beginning and ending inventory amounts along with the production and sales for the month in slipper units. A pair of slippers equals one unit.

Beginning Inventory: 0 Units

Production: 80,000 Units

Sales: 60,000 Units

Ending Inventory: 20,000 Units

Prepare an absorption costing income statement.

Requirement 2
REDICO Company
Absorption Costing Income Statement
	Units	$
Sales	X	$		$
Variable Cost of Goods Sold:
Beginning Inventory			$
Direct Materials	X	$	$
Direct Labor	X	$	$
Manufacturing Overhead	X	$	$
Total Variable Costs			$
Allocated Fixed Manufacturing Costs	X	$	$
Cost of Good Available for Sale			$
Deduct Ending Inventory	X	$	$
Costs of Goods Sold				$
Gross Margin				$
Fixed Costs:
Variable Selling Costs	X	$		$
Fixed Administrative Costs				$
Operating Income				$