Ravi makes and retails only one product, photo frames. She buys the wooden frames in bulk for $3 each and it costs another $1 to add cool designs to the product. Last year, Ravi sold 2,000 frames for $12 apiece. She paid $300 a month to rent a sales booth at his local outdoor market, along with a sales commission of $1 per frame sold (her sister made all the sales on commission). 

a) Complete Ravi’s Frames’ contribution income statement. 

b) Ravi is wondering what her break-even point is. Calculate both the break-even revenue and sales volume. 

c) Next year, Ravi is planning to sell 3,000 frames. What will be his margin of safety?

d) Prepare a Cost-Volume-Profit graph for Ravi’s Frames. Label the axes, lines, loss and profit areas, and break-even point clearly on your graph.