For this information make appropriate assumptions about

Question

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.

1. Units produced andsold                                                              $50,000
2. Sales price perunit                                                                             $70
3. Carpenter labor to makeshelves                                                  600,000
4. Wood to make theshelves                                                           450,000
5. Sales staffsalaries                                                                          80,000
6. Office and showroom rentalexpenses                                           150,000
7. Depreciation on carpentryequipment                                             50,000
8. Advertising                                                                                  200,000
9. Sales commissions based on number of unitssold                          180,000
10. Miscellaneous fixed manufacturing overhead(support)                   150,000
11. Rent for the building where the shelves aremade                            300,000
12. Miscellaneous variable manufacturing overhead(support)               350,000
13. Depreciation for officeequipment                                                    10,000           

Required:

1. Based on this information, prepare a financial income statement(that is, in the form required under GAAP for U.S. externalreporting).
2. For this information, make appropriate assumptions about cost behavior and assume that direct labor costs vary directly with thenumber of units produced. How many units must the company sell inorder to earn a pretax profit of $500,000?