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The following data are from the accounting records of Fremont Products for year 2:
Units produced and sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42,500Total revenues and costs Sales revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $132,000Direct materials costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,000Direct labor costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,000Variable manufacturing overhead . . . . . . . . . . . . . . . . . . . 8,500Fixed manufacturing overhead . . . . . . . . . . . . . . . . . . . . . 22,000Variable marketing and administrative costs . . . . . . . . . . . 6,800Fixed marketing and administrative costs . . . . . . . . . . . . . 16,000
Requirement: Prepare:
a. A gross margin income statement.
b. A contribution margin income statement.
Compute the break-even point in dollars for 2014 and compute the contribution margin under each of the alternative courses of action.
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