Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit 6,000 Production (# of boxes) Production Costs: Direct Materials 4,000 $60,000 $90,000 Direct Labour 80,000 120,000 Overhead: Indirect Materials.... Indirect Labour 25,000 37,500 40,000 50,000 Depreciation Selling & Administrative Expenses: 20,000 20,000 Sales Salaries 50,000 65,000 Office Salaries. 30,000 30,000 Advertising 45,000 45,000 Other. 15.000 20.000 Total $365.000 $477,500

Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round. The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower limits of activity for the year ended December 31, 2020. Lower Limit Upper Limit 6,000 Production (# of boxes) Production Costs: Direct Materials 4,000 $60,000 $90,000 Direct Labour 80,000 120,000 Overhead: Indirect Materials.... Indirect Labour 25,000 37,500 40,000 50,000 Depreciation Selling & Administrative Expenses: 20,000 20,000 Sales Salaries 50,000 65,000 Office Salaries. 30,000 30,000 Advertising 45,000 45,000 Other. 15.000 20.000 Total $365.000 $477,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question

c)
Assuming sales of 5,000 units, prepare a contribution margin income statement for the year ended
December 31, 2020, detailing the components of total variable costs and total fixed costs, and clearly
showing contribution and net income.
d)
Assuming sales of 5,000 units, calculate Buggs-Off break-even point and margin of safety in units and
sales dollars.

Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.
The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower
limits of activity for the year ended December 31, 2020.
Lower Limit Upper Limit
Production (# of boxes)
Production Costs:
4,000
6,000
Direct Materials.
$60,000
$90,000
Direct Labour
80,000
120,000
Overhead:
Indirect Materials..
25,000
37,500
Indirect Labour
40,000
50,000
Depreciation
20,000
20,000
Selling & Administrative Expenses:
Sales Salaries .
Office Salaries
50,000
65,000
30,000
30,000
Advertising
45,000
45,000
Other
15,000
20.000
Total
$365.000
$477.500

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