Contribution Income Statement and Cost-Volume-Profit Graph Problem Picnic Time produces a picnic basket that is...
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Accounting
Contribution Income Statement and Cost-Volume-Profit Graph
Problem
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.
Direct Materials ..................$25Selling and Administrative .......... $68,000
Direct Labor ......................... $15Total .............................................$104,000
Manufacturing Overhead ...$ 5$ 45
Selling and Administrative ................ $ 4
Total .................................................... $ 49
Required
a)How do you prepare a contribution income statement for July.
b)How do you 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.
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