Bart's Woodwork Company makes and sells wooden shelves.Bart's carpenters make the shelves in the company'srented building. Bart has a separate office at another locationthat also includes a showroom where customers can view sampleshelves and ask questions of sales people. The company sells allthe shelves it produces each year. Assume the company keeps noinventories. The following information pertains to Bart'sWoodwork Company for the past year.
- Units produced andsold $50,000
- Sales price perunit $70
- Carpenter labor to makeshelves 600,000
- Wood to make theshelves 450,000
- Sales staffsalaries 80,000
- Office and showroom rentalexpenses 150,000
- Depreciation on carpentryequipment 50,000
- Advertising 200,000
- Sales commissions based on number of unitssold 180,000
- Miscellaneous fixed manufacturing overhead(support) 150,000
- Rent for the building where the shelves aremade 300,000
- Miscellaneous variable manufacturing overhead(support) 350,000
- Depreciation for officeequipment 10,000
Required
- Based on this information, prepare a financial income statement(that is, in the form required under GAAP for U.S. externalreporting).
- For this information, make appropriate assumptions about costbehavior and assume that direct labor costs vary directly with the number of units produced. How many units must the company sell inorder to earn a pretax profit of $500,000?