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Picnic Time produces a picnic basket that is sold for $$136$ 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 Cost per Unit Fixed Costs per Month

Manufacturing: Manufacturing overhead $$36,000$

Direct materials. $$34$ Selling and administrative $86,000$

Direct labor $24$ Total $$122,000$

Manufacturing overhead $14$ $$72$

Selling and administrative $4$

Total $$76$

REQUIRED

a$.$ Prepare a contribution income statement for July.

Sales

Answer $1$

Less variable costs:

Direct materials

Answer $2$

Direct labor

Answer $3$

Manufacturing overhead

Answer $4$

Selling and administrative

Answer $5$

Contribution margin

Answer $6$

Less fixed costs:

Manufacturing overhead

Answer $7$

Selling and administrative

Answer $8$

Profit

Answer $9$

b$.$ Determine the break$-$even point in sales dollars.

Note: Do not round intermediate calculations

Note: Round up to the nearest dollar, enter $$80$ for $$79\mathrm{.}2$

$Answer $10$

c$.$ Suppose the cost of labor is expected to increase next year. How will this affect the

break$-$even point?

Break$-$even point will Answer $11$

d$.$ Determine July's margin of safety in sales dollars.

$Answer $12$

follow.

REQUIRED

a$.$ Prepare a contribution income statement for July.

e$.$ What dollar sales volume is currently required to obtain a before$-$tax profit of $$120,000?$

Note: Do not round intermediate calculations

Note: Round up to the nearest dollar, enter $$80$ for $$79\mathrm{.}2$

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