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Contribution Income Statement and Cost-Volume-Profit Graph Problem Picnic Time produces a picnic basket that is...

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Question

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.

Variable Costs per Unit Fixed Costs per Month

Manufacturing:Manufacturing overhead ............$36,000

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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