(Formula; graph; income statement) Pittsburg Tar Co. had the following income statement for 2010: Sales (30,000 gallons × $8) $240,000 Variable cost Production (40,000 gallons × $3) $120,000 Selling (30,000 gallons × $0.50) 15,000 (135,000) Contribution margin $105,000 Fixed cost Production $ 46,000 Selling and administrative 6,200 (52,200) Income before tax $ 52,800 Income tax (40%) (21,120) Net income $ 31,680 a. Compute the break-even point using the equation approach.b. Prepare a CVP graph to reflect the relationships among cost, revenue, profit, and volume.c. Prepare a profit-volume graph.d. Prepare a short explanation for company management about each of the graphs.e. Prepare an income statement at break-even point using variable costing.

(Formula; graph; income statement) Pittsburg Tar Co. had the following income statement for 2010: Sales (30,000 gallons × $8) $240,000 Variable cost Production (40,000 gallons × $3) $120,000 Selling...

(Formula; graph; income statement) Pittsburg Tar Co. had the following income statement for 2010:

Sales (30,000 gallons × $8)		$240,000
Variable cost
Production (40,000 gallons × $3)	$120,000
Selling (30,000 gallons × $0.50)	15,000	(135,000)
Contribution margin		$105,000
Fixed cost
Production	$ 46,000
Selling and administrative	6,200	(52,200)
Income before tax		$ 52,800
Income tax (40%)		(21,120)
Net income		$ 31,680

a. Compute the break-even point using the equation approach.

b. Prepare a CVP graph to reflect the relationships among cost, revenue, profit, and volume.

c. Prepare a profit-volume graph.

d. Prepare a short explanation for company management about each of the graphs.

e. Prepare an income statement at break-even point using variable costing.

Answered Same DayDec 24, 2021

Answer To: (Formula; graph; income statement) Pittsburg Tar Co. had the following income statement for 2010:...

Robert answered on Dec 24 2021

127 Votes

a. The break-even point is the point at which total revenue equals total cost.
Fixed costs ÷ Contribution margin = Break-even point
$52,200 ÷ ($8  $3.50) = $52,200 ÷ $4.50 = 11,600 units or $92,800 in revenue

b.

c. Break-even point

d. Graph (b) demonstrates how total costs and total revenues change as volume changes.
Profit or loss...

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(Formula; graph; income statement) Pittsburg Tar Co. had the following income statement for 2010: Sales (30,000 gallons × $8) $240,000 Variable cost Production (40,000 gallons × $3) $120,000 Selling...

Answer To: (Formula; graph; income statement) Pittsburg Tar Co. had the following income statement for 2010:...

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