Question

The following costs related to Mealtime Food Supply Companyannually: Variable Costs: Direct materials $2.50 Direct labor...

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.

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Answer #1

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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