Question
The Auto Supply manufactures memory cards that sell to wholesalers for $2.00 each. Variable and fixed costs are as follows: Variable Costs per card: Fixed
The Auto Supply manufactures memory cards that sell to wholesalers for $2.00 each. Variable and fixed costs are as follows: Variable Costs per card: Fixed Costs per Month: Manufacturing Factory overhead $7,000 Direct materials $0.30 Selling and admin. 3,000 Direct labor 0.25 Factory overhead 0.25 $0.80 Selling and admin. 0.15 Total $0.95 Total $10,000 Auto Supply produced and sold 10,000 cards during October 2018. There were no beginning or ending inventories. Required: a) Prepare a contribution income statement for the month of October. b) Determine Auto Supplys monthly break-even point in units. c) Determine the effect on monthly profit of a 1,000 unit increase in monthly sales. d) If Auto Supply is subject to an income tax of 40 percent, determine the dollar sales volume required to earn a monthly after-tax profit of $15,000.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started