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Riverside Inc. makes one model of wooden canoe. Partial information for it follows: Number of Canoes...

Riverside Inc. makes one model of wooden canoe. Partial information for it follows:

Number of Canoes Produced and Sold
530 680 830
Total costs
Variable costs $ 71,550 ? ?
Fixed costs 148,500 ? ?
Total costs $ 220,050 ? ?
Cost per unit
Variable cost per unit ? ? ?
Fixed cost per unit ? ? ?
Total cost per unit ? ? ?


Required:
1. Complete the table. (Round your cost per unit answers to 2 decimal places.)   



3. Suppose Riverside sells its canoes for $511 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your contribution margin to the nearest whole dollar and your contribution margin ratio to the nearest whole percent.)


4. Next year Riverside expects to sell 880 canoes. Complete the contribution margin income statement for the company.

Solutions

Expert Solution

1 530 Working 680 830
Total costs
Variable costs $71,550 91800 135 X 680 units 112050 135 X 830 units
Fixed costs $148,500 $148,500 Remains fixed $148,500
Total costs $220,050 240300 91800+148500 260550 112050+148500
Cost per unit
Variable cost per unit 135 71550/530 units 135 135
Fixed cost per unit        280.19 148500/530 units                   218.38 148500/680 units                    178.92 148500/830 units
Total cost per unit        415.19 220050/530 units                   353.38 135+218.38                    313.92 135+178.92
In the given case the variable cost per unit is $135 and the variable cost per unit is fixed at all levels
fixed cost is fixed in value at all level of production
total cost per unit is decreasing due to fixed cost per unit is changing due to increasing the units
3 Calculation of contribution margin
Contribution= Sales less variable cost
Sales $ per unit 511
Variable cost per unit 135
Contribution= Sales less variable cost 376 511-376
Contribution margin ration =contribution/ sales 73.58% 376/511
the contribution margin is 73.58%
the contribution per unit is $376
4 880 canoes
Sales 449680 $511 X 880 Canoes
Variable costs 118800 $135 X 880 Canoes
Contribution= Sales less variable cost 330880 449680-118800
Fixed costs $148,500 Remains fixed
Profit 182380 330880-148500
the contribution is $330880 and the profit is 182380

ekkarill92 answered 8 months ago
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