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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