E$15-17.$ Contribution Income Statement and Cost$-$Volume$-$Profit Graph

Picnic Time produces a picnic basket that is sold for $$100$ per unit. Assume the company produced and sold $4,000$ baskets during July. There were no beginning or ending inventories. Variable and fixed costs follow.

Variable Costs per Unit

Manufacturing:

Direct materials: $$25$

Direct labor: $$15$

Manufacturing overhead: $$5$

Selling and administrative: $$4$

Total: $$49$

Fixed Costs per Month

Manufacturing overhead: $$36,000$

Selling and administrative: $$68,000$

Total: $$104,000$

Required:

a$.$ Prepare a contribution income statement for July.

b$.$ Prepare a cost$-$volume$-$profit graph. Label the horizontal axis in units with a maximum value of $8,000.$ Label the vertical axis in dollars with a maximum value of $$1,000,000.$ Draw a vertical line on the graph for the current $(4,000)$ unit sales level, and label total variable costs, total fixed costs, and total profits at $4,000$ units.