(Appendix) Tom & Jerry Inc. had the following income statement for 2000.
|
Sales (15,000 gallons @ $8) |
$120,000 |
|
|
Variable Costs |
||
|
Production (20,000 gallons @ $3) |
$60,000 |
|
|
Selling (20,000 gallons @ $0.50) |
10,000 |
(70,000) |
|
Contribution Margin |
$ 50,000 |
|
|
Fixed Costs |
||
|
Production |
$22,000 |
|
|
Selling and administrative |
4,000 |
(26,000) |
|
Income before Taxes |
$ 24,000 |
|
|
Income Taxes (40%) |
(9,600) |
|
|
Net Income |
$ 14,400 |
|
a. Prepare a CVP graph, in the traditional manner, to reflect the relations among costs, revenues, profit, and volume.
b. Prepare a CVP graph, in the contemporary manner, to reflect the relations among costs, revenues, profit, and volume.
c. Prepare a profit volume graph. d. Prepare a short explanation for company management about each of the graphs.