Question

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 Fixed Costs per Month Manufacturing: Manufacturing overhead $36,000 Direct materials $25 Selling and administrative 68,000 Direct labor 15 Total $104,000 Manufacturing overhead 5 $45 Selling and administrative 4 Total $49
Required
Prepare a contribution income statement for July.
Do not use any negative signs with your answers.
Picnic Time
Contribution Income Statement
For the Month of July
Sales Answer
Less variable costs
Direct materials Answer
Direct labor Answer
Manufacturing overhead Answer
Selling and administrative Answer Answer
Contribution margin Answer
Less fixed cost:
Manufacturing overhead Answer
Selling and administrative Answer Answer
Profit Answer

Answer 1

Answer:

Graph Picnic Time

Contribution Income Statement

For the Month of July

Sales                                               $400,000

Less variable costs:

Direct materials                              $100,000

Direct labor                                        60,000

Manufacturing overhead                  20,000

Selling and administrative                 16,000

Total variable costs                       $196,000

Contribution margin                     $204,000

Less fixed cost:

Manufacturing overhead $36,000

Selling and administrative 68,000

Total fixed costs                            $104,000

Profit                                              $100,000

Explanation:

a) Data and Calculations:

Selling price per picnic basket = $100

July Production and sales = 4,000 baskets

Variable Costs per Unit:

Manufacturing:

Direct materials              $25

Direct labor                        15  

Manufacturing overhead   5

Total                               $45

Selling and administrative 4

Total                               $49

Fixed Costs per Month

Manufacturing overhead $36,000

Selling and administrative  68,000

Total                                 $104,000

Contribution Income Statement

For the Month of July

Sales                                               $400,000 ($100 * 4,000)

Less variable costs:

Direct materials                              $100,000 ($24 * 4,000)

Direct labor                                        60,000 ($15 * 4,000)

Manufacturing overhead                  20,000 ($5 * 4,000)

Selling and administrative                 16,000($4 * 4,000)

Total variable costs                       $196,000

Contribution margin                     $204,000

Less fixed cost:

Manufacturing overhead $36,000

Selling and administrative 68,000

Total fixed costs                            $104,000

Profit                                              $100,000