Picnic Time produces a picnic basket that is sold for $132 per unit. Assume the company...
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Picnic Time produces a picnic basket that is sold for $132 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 Cost per Unit Fixed Costs per Month Manufacturing: Direct materials. Direct labor $33 Manufacturing overhead Selling and administrative $36,000 84,000 23 Total $120,000 Manufacturing overhead 13 $69 Selling and administrative Total 4 $73 REQUIRED a. Prepare a contribution income statement for July. Sales Less variable costs: 528,000 Direct materials 132,000 Direct labor 92,000 Manufacturing overhead $ 52,000 Selling and administrative $ 16,000 Contribution margin $ 236,000 Less fixed costs: Manufacturing overhead 36,000 Selling and administrative $ 84,000 Profit 116,000 b. Determine the break-even point in sales dollars. Note: Do not round intermediate calculations Note: Round up to the nearest dollar, enter $80 for $79.2 c. Suppose the cost of labor is expected to increase next year. How will this affect the break-even point? d. Determine July's margin of safety in sales dollars. e. What dollar sales volume is currently required to obtain a before-tax profit of $120,000? Note: Do not round intermediate calculations Note: Round up to the nearest dollar, enter $80 for $79.2 Picnic Time produces a picnic basket that is sold for $132 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 Cost per Unit Fixed Costs per Month Manufacturing: Direct materials. Direct labor $33 Manufacturing overhead Selling and administrative $36,000 84,000 23 Total $120,000 Manufacturing overhead 13 $69 Selling and administrative Total 4 $73 REQUIRED a. Prepare a contribution income statement for July. Sales Less variable costs: 528,000 Direct materials 132,000 Direct labor 92,000 Manufacturing overhead $ 52,000 Selling and administrative $ 16,000 Contribution margin $ 236,000 Less fixed costs: Manufacturing overhead 36,000 Selling and administrative $ 84,000 Profit 116,000 b. Determine the break-even point in sales dollars. Note: Do not round intermediate calculations Note: Round up to the nearest dollar, enter $80 for $79.2 c. Suppose the cost of labor is expected to increase next year. How will this affect the break-even point? d. Determine July's margin of safety in sales dollars. e. What dollar sales volume is currently required to obtain a before-tax profit of $120,000? Note: Do not round intermediate calculations Note: Round up to the nearest dollar, enter $80 for $79.2
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Answer a Contribution Income Statement for July Amount Sales 528000 Less Variable Costs Direct mater... View the full answer
Related Book For
Introduction to Management Accounting
ISBN: 978-0133058789
16th edition
Authors: Charles Horngren, Gary Sundem, Jeff Schatzberg, Dave Burgsta
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