The following costs related to Mealtime Food Supply Companyannually:
Variable Costs:
Direct materials $2.50
Direct labor 0.75
Manufacturing Overhead 1.25
Selling and administrative 1.50
Fixed Costs:
Manufacturing overhead $10,000
Selling and Administrative 5,000
The selling price per unit of product is $15.00
At a sales volume of 15,000 units, what is the total profit for the company?
$130,000
$120,000
$225,000
$150,000
None of these numbers is correct.
Income statement
Sales (15,000 x 15) |
225,000 | |
Variable cost : | ||
Direct materials (15,000 x 2.50) | 37,500 | |
Direct labor (15,000 x 0.75) | 11,250 | |
Manufacturing Overhead (15,000 x 1.25) | 18,750 | |
Selling and administrative (15,000 x 1.50) | 22,500 | |
Total variable cost | -90,000 | |
Contribution margin | 135,000 | |
Fixed cost : | ||
Manufacturing overhead | 10,000 | |
Selling and Administrative | 5,000 | |
Total fixed cost | -15,000 | |
Total profit | $120,000 |
Second option is the correct option
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