Question

Contribution Income Statement and Cost-Volume-Profit Graph

Kopi Company produces dog cages that are sold for $35 per unit. The company produced and sold 7,000 dog cages during July 2017. There were no beginning or ending inventories. Variable and fixed costs follow.
Variable Costs per Unit Fixed Costs per Month
Manufacturing: Manufacturing overhead $35,000
Direct materials $10 Selling and administrative 15,000
Direct labor 2 Total $50,000
Manufacturing overhead 5 $17
Selling and administrative 5
Total $22
Required
Prepare a contribution income statement for July.
Do not use any negative signs with your answers.
Kopi Company
Contribution Income Statement
For the Month of July 2017
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

Profit: $ 41,000

Step-by-step explanation:

Kopi Company

Contribution Income Statement

For the Month of July 2017

Sales 35*7000 $ 245000

Less variable costs

Direct materials $ 10*7000 70,000

Direct labor 2*7000 14000

Manufacturing overhead 5*7000 35000

Selling and administrative 5*7000 35000

Contribution margin 91,000

Less fixed cost: 50,000

Manufacturing overhead 35000

Selling and administrative 15000

Profit $ 41,000

In contribution margin income staatement the variale costs are deducted from the sales to get the contribution margin and the fixed expenses are deducted to get the profit.

As there are no ending and beginning inventories the profit will not change under both absorption and variable costing.