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The Auto Supply manufactures memory cards that sell to wholesalers for $2.00 each. Variable and...

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Accounting

The Auto Supply manufactures memory cards that sell to wholesalers for $2.00 each. Variable and fixed costs are as follows:

Variable Costs per card:

Fixed Costs per Month:

Manufacturing

Factory overhead

$7,000

Direct materials

$0.30

Selling and admin.

3,000

Direct labor

0.25

Factory overhead

0.25

$0.80

Selling and admin.

0.15

Total

$0.95

Total

$10,000

a) Prepare a contribution income statement for the month of October.

b) Determine Auto Supplys monthly break-even point in units.

c) Determine the effect on monthly profit of a 1,000 unit increase in monthly sales.

d) If Auto Supply is subject to an income tax of 40 percent, determine the dollar sales volume required to earn a monthly after-tax profit of $15,000.

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