Question

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

Number of Canoes Produced and Sold
		515		665		815
Total costs
Variable costs	$	71,585		?		?
Fixed costs		148,400		?		?
Total costs	$	219,985		?		?
Cost per unit
Variable cost per unit		?		?		?
Fixed cost per unit		?		?		?
Total cost per unit		?		?		?

Required:

1. Complete the table.

3. Suppose Riverside sells its canoes for $510 each. Calculate the contribution margin per canoe and the contribution margin ratio.

4. Next year Riverside expects to sell 865 canoes. Complete the contribution margin income statement for the company.

Answer 1

1) Table:
Number of Canoes produced and sold	515	665	815
total costs:
variable costs	71585	92435	113285
fixed costs	148400	148400	148400
total costs	219985	240835	261685
Cost per unit:
variable cost per unit	139	139	139
fixed cost per unit	288.16	223.16	182.09
Total cost per unit	427.16	362.16	321.09
3) Contribution margin per canoe:
selling price per canoe	510
Less: variable cost per canoe	139
Contribution margin per canoe	371
Contribution margin ratio, % =	72.75
(Contri per unit / Selling price per unit)
4) Contribution margin income statement:
	Amount $
selling price per canoe	510
Less: variable cost per canoe	139
Contribution margin per canoe	371
Number of Canoes produced and sold	865
Total Contribution margin	320915