Stuckies produces white school glue. Their glue bottles are primarily sold at department stores across the country. The cost of manufacturing and marketing their glue, at their normal factory volume of 20,000,000 bottles of glue per month, is shown in the table below. Stuckie sells their glue bottles for $1.50 each. Stuckie is making a small profit, but they would prefer to increase their Operating Income. Fixed costs are shown on a per-unit basis in the table based on normal volume. However, fixed costs as a total do not change when volume changes, so you will need to determine total fixed costs first.

1.What is their monthly fixed cost, variable cost per bottle of glue, and contribution margin per bottle of glue? Show your calculations for each.

2. Prepare a one-month Contribution Margin Income Statement for the company using the given financial data at their normal factory volume. Include line items for each type of cost as well as subtotals for the variable and fixed costs.

3.Using a one-month Contribution Margin Income Statement, verify that your calculated break-even volume results in Operating Income of Zero. (Prepare the entire Contribution Margin statement at the break-even level.)
 

Transcribed Image Text:

Unit Manufacturing Costs: Variable Materials Variable Labor Variable Overhead Fixed Overhead Total Unit Manufacturing Costs: Unit Marketing Costs: Variable Marketing Costs Fixed Marketing Costs Total Unit Marketing Costs: $ ԱԴ ԱԴ ԱԴ ԱԴ $ $ $ $ $ Per Unit 0.30 0.35 0.10 0.25 0.05 0.20 $ $ S. Per Unit 1.00 0.25 Unit Manufacturing Costs: Variable Materials Variable Labor Variable Overhead Fixed Overhead Total Unit Manufacturing Costs: Unit Marketing Costs: Variable Marketing Costs Fixed Marketing Costs Total Unit Marketing Costs: $ ԱԴ ԱԴ ԱԴ ԱԴ $ $ $ $ $ Per Unit 0.30 0.35 0.10 0.25 0.05 0.20 $ $ S. Per Unit 1.00 0.25

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