The Auto Supply manufactures memory cards that sell to wholesalers for $2.00 each. Variable and fixed costs are as follows:
Auto Supply produced and sold 10,000 cards during October 2018. There were no beginning or ending inventories.
Required:
a. Prepare a contribution income statement for the month of October.
b. Determine Auto Supply's 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.

Question

The Auto Supply manufactures memory cards that sell to wholesalers for $2.00 each. Variable and fixed costs are as follows:
  Auto Supply produced and sold 10,000 cards during October 2018. There were no beginning or ending inventories.
Required:
a. Prepare a contribution income statement for the month of October.
b. Determine Auto Supply's 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.

Quizplus · Accepted Answer

The Answer of The Auto Supply manufactures memory cards that sell to wholesalers for $2.00 each. Variable and fixed costs are as follows:
  Auto Supply produced and sold 10,000 cards during October 2018. There were no beginning or ending inventories.
Required:
a. Prepare a contribution income statement for the month of October.
b. Determine Auto Supply's 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.

The Auto Supply Manufactures Memory Cards That Sell to Wholesalers