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Unformatted text preview: E313 a.Manitoba Company Contribution Income Statement For the Month of May 2007 Sales (6,000 ×$50) $300,000 Less variable costs: Direct materials (6,000 ×$5) $ 30,000 Direct labor (6,000 ×$10) 60,000 Factory overhead (6,000 ×$10) 60,000 Selling and administrative (6,000 ×$5) 30,000(180,000)Contribution margin $120,000 Less fixed costs: Factory overhead $ 40,000 Selling and administrative 20,000(60,000)Profit $ 60,000b.$0$50,000$100,000$150,000$200,000$250,000$300,000$350,0002,0004,0006,0008,000 10,000Unit salesTotal revenues and Total costsNote:The instructor might extend this assignment in class, computing the breakeven point, the margin of safety, and the impact on profits of a change in sales. Variable costs = $180,000 Fixed costs = $60,000 Profit = $60,000 E315a.Sales $750,000 Variable costs (412,500) Contribution margin $337,500Contribution margin ratio = $337,500/$750,000 = 0.45 Annual breakeven dollar sales volume = $210,000/0.45 = $466,667b.Annual margin of safety in dollars: Sales $750,000 Breakeven sales dollars (466,667) Margin of safety $283,333c.To determine the variable and total costs lines, it is necessary to compute the variable cost ratio: Variable = variable costs= $412,500= 0.55 cost ratio sales $750,000 At a volume of $1,000,000 sales dollars, variable costs are $550,000. $0$250,000$500,000$750,000$1,000,000$0$250,000$500,000$750,000$1,000,000 $1,250,000Total RevenuesTotal Revenues and Total Costsd.Revised annual breakeven dollar sales: ($210,000 + $35,000)/0.45 = $544,444Variable costs = $412,500 Fixed costs = $210,000 Profit = $127,500 E316a. 1. Total variable costs 2. Total revenue 3. Total costs 4. Variable costs 5. Fixed costs 6. Total costs 7. Contribution margin 8. Breakeven unit sales volume 9. Loss area 10. Profit area b.Line CCLine ORBreakEven Point...
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This homework help was uploaded on 02/19/2008 for the course H ADM 221 taught by Professor Gpotter during the Spring '05 term at Cornell.
 Spring '05
 GPOTTER

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