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E15-17. Contribution Income Statement and Cost-Volume-Profit Graph Picnic Time produces a picnic basket...

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Accounting

E15-17. Contribution Income Statement and Cost-Volume-Profit Graph
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
Manufacturing:
Direct materials: $25
Direct labor: $15
Manufacturing overhead: $5
Selling and administrative: $4
Total: $49
Fixed Costs per Month
Manufacturing overhead: $36,000
Selling and administrative: $68,000
Total: $104,000
Required:
a. Prepare a contribution income statement for July.
b. 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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