Straight Lines Pen \& Ink Contribution Margin \& Cost-Profit Volume Analysis Straight Lines Pen \& Ink Company produces ink pens. The pens only come in one style and one color - Black Tubular pens. The company produces 400,000 pens a month, but the relevant range for producing the product is 300,000 to 500,000 . The company's pens are sold for 50.75 a piece to local retailers. Immediately below is a summary of the costs of producing the pens. COST SUMMARY Required: Answer the following questions regarding Straight Lines Pen \& Ink Company. 1. Create a monthly income statement using an absorption costing approach. (400,000 pens produced and sold) 2. Create a monthly income statement using a contribution margin (variable costing) approach. (400,000 pens produced and sold) 3. How much does it cost the company to produce black pens (in total and per pen) using absorption costing and variable costing? - Use your income statement from above. 7. Assuming they sell 400,000 pens a month, what is the minimum amount they can sell the pens for to break even? 8. How much profit do they make if they make and sell 300,000 pens a month? 500,000 pens a month? Assume a 75 cent selling price. 9. How much do they need to raise the price of pens, if they want to make $75,000 profit a month? (Assume they are selling 400,000 pens). 10. Several fierce competitors have entered in the pen market and prices are going down. The market for pens has now dropped to $0.65 per pen. Further, the company expects that it will only be able to sell 300,000 pens per month. What are some alternatives they could take to reduce overall costs of producing pens? 11. The company wants to make $56,000 in profit, but can also lower their materials variable costs to $0.21 per pen by using cheaper plastic. (Assume all other costs to produce the pen remain the same) How many pens do they have to sell? (Assume a sales price of $0.75 per pen.) How many pens do they have to sell to breakeven