Question

In: Accounting

The following costs result from the production and sale of 4,300 drum sets manufactured by Tight...

The following costs result from the production and sale of 4,300 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $280 each. The company has a 35% income tax rate.

  

Variable production costs

Plastic for casing

$

98,900

Wages of assembly workers

378,400

Drum stands

137,600

Variable selling costs

Sales commissions

90,300

Fixed manufacturing costs

Taxes on factory

13,000

Factory maintenance

26,000

Factory machinery depreciation

86,000

Fixed selling and administrative costs

Lease of equipment for sales staff

26,000

Accounting staff salaries

76,000

Administrative management salaries

156,000


Required:

Prepare a contribution margin income statement for the company.

Complete this question by entering your answers in the tabs below.

TIGHT DRUMS COMPANY

Contribution Margin Income Statement

For Year Ended December 31, 2017

Sales

$1,204,000

Variable costs:

Plastic for casing

98,900

Wages of assembly workers

378,400

Drum stands

137,600

Sales commissions

90,300

?

?

Total variable costs

705,200

Contribution margin

498,800

Fixed costs

Taxes on factory

13,000

Factory maintenance

26,000

Factory machinery depreciation

86,000

Administrative management salaries

156,000

Lease of equipment for sales staff

26,000

Accounting staff salaries

76,000

?

?

Total fixed costs

383,000

Pretax income

115,800

Income tax

?

Net income

?


Required: 2. Compute its contribution margin per unit and its contribution margin ratio

Complete this question by entering your answers in the tabs below.

(Round Contribution margin ratio to nearest whole percentage.)

TIGHT DRUMS COMPANY

Contribution Margin Income Statement (partial)

For Year Ended December 31, 2017

Per Unit

Sales

$280

Variable costs:

Plastic for casing

?

Wages of assembly workers

?

Drum stands

?

Sales commissions

?

?

?

Total variable costs

?

Contribution margin

?

?

?

Note: Please solve the problem completely. Thank you.

Solutions

Expert Solution

1) Contribution Margin Income Statement
Sales (4300*280) 1204000
Variable costs:
Plastic for casing 98,900
Wages of assembly workers 378,400
Drum Stands 137,600
Sales Commissions 90,300
total variable costs 705,200
Contribution margin 498,800
Fixed costs
Taxes on factory 13,000
Factory maintenance 26,000
Factory machinery depreciation 86,000
lease of equipment for sales staff 26,000
Accounting staff salaries 76,000
Administrative management salaries 156,000
total fixed costs 383,000
Pre tax income 115,800
income tax (115800*35%) 40530
Net income 75,270
2)
Contribution margin income statement (partial)
Sales 280
Variable costs:
Plastic for casing 23
Wages of assembly workers 88
Drum Stands 32
Sales Commissions 21
total variable costs 164
Contribution margin 116
Contribution margin ratio
Sales 280 100%
Variable costs 164 59%
Contribution margin 116 41%

Related Solutions

The following costs result from the production and sale of 4,300 drum sets manufactured by Tight...
The following costs result from the production and sale of 4,300 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $280 each. The company has a 35% income tax rate. Variable production costs Plastic for casing $ 98,900 Wages of assembly workers 378,400 Drum stands 137,600 Variable selling costs Sales commissions 90,300 Fixed manufacturing costs Taxes on factory 13,000 Factory maintenance 26,000 Factory machinery depreciation 86,000 Fixed selling and administrative...
The following costs result from the production and sale of 4,050 drum sets manufactured by Tight...
The following costs result from the production and sale of 4,050 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $255 each. The company has a 30% income tax rate. Variable production costs Plastic for casing $ 72,900 Wages of assembly workers 336,150 Drum stands 109,350 Variable selling costs Sales commissions 64,800 Fixed manufacturing costs Taxes on factory 10,500 Factory maintenance 21,000 Factory machinery depreciation 81,000 Fixed selling and administrative...
The following costs result from the production and sale of 4,950 drum sets manufactured by Tight...
The following costs result from the production and sale of 4,950 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $345 each. The company has a 40% income tax rate.                 Variable production costs            Plastic for casing   $   178,200      Wages of assembly workers      499,950      Drum stands      222,750      Variable selling costs            Sales commissions      168,300     ...
The following costs result from the production and sale of 4,850 drum sets manufactured by Tight...
The following costs result from the production and sale of 4,850 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $335 each. The company has a 30% income tax rate.    Variable production costs Plastic for casing $ 164,900 Wages of assembly workers 480,150 Drum stands 208,550 Variable selling costs Sales commissions 155,200 Fixed manufacturing costs Taxes on factory 6,500 Factory maintenance 13,000 Factory machinery depreciation 73,000 Fixed selling and...
The following costs result from the production and sale of 4,600 drum sets manufactured by Tight...
The following costs result from the production and sale of 4,600 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $310 each. The company has a 25% income tax rate.    Variable production costs Plastic for casing $ 133,400 Wages of assembly workers 432,400 Drum stands 174,800 Variable selling costs Sales commissions 124,200 Fixed manufacturing costs Taxes on factory 9,000 Factory maintenance 18,000 Factory machinery depreciation 78,000 Fixed selling and...
1. The following costs result from the production and sale of 4,450 drum sets manufactured by...
1. The following costs result from the production and sale of 4,450 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $295 each. The company has a 30% income tax rate. Variable production costs Plastic for casing $ 115,700 Wages of assembly workers 404,950 Drum stands 155,750 Variable selling costs Sales commissions 106,800 Fixed manufacturing costs Taxes on factory 14,500 Factory maintenance 29,000 Factory machinery depreciation 89,000 Fixed selling and...
Listed here are the total costs associated with the production of 1,000 drum sets manufactured by...
Listed here are the total costs associated with the production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $508 each.    Costs 1. Plastic for casing—$20,000 2. Wages of assembly workers—$88,000 3. Property taxes on factory—$7,000 4. Accounting staff salaries—$37,000 5. Drum stands (1,000 stands purchased)—$41,000 6. Rent cost of equipment for sales staff—$12,000 7. Upper management salaries—$180,000 8. Annual flat fee for factory maintenance service—$18,000 9. Sales commissions—$26 per unit 10. Machinery depreciation, straight-line—$37,000 Required:...
Listed here are the total costs associated with the production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $456 each.
Problem 01-1A Cost computation, classification, and analysis LO C2, C3Listed here are the total costs associated with the production of 1,000 drum sets manufactured by TrueBeat. The drum sets sell for $456 each.  Costs1.Plastic for casing—$19,0002.Wages of assembly workers—$89,0003.Property taxes on factory—$7,0004.Accounting staff salaries—$30,0005.Drum stands (1,000 stands purchased)—$31,0006.Rent cost of equipment for sales staff—$24,0007.Upper management salaries—$155,0008.Annual flat fee for factory maintenance service—$13,0009.Sales commissions—$20 per unit10.Machinery depreciation, straight-line—$38,000Problem 01-1A Part 1Required:1. Classify each cost and its amount as (a) either variable or...
The following is a list of costs that were incurred in the production and sale of...
The following is a list of costs that were incurred in the production and sale of large commercial airplanes: Classify each cost as either a product cost or a period cost. Indicate whether each product cost is a direct materials cost, a direct labor cost, or a factory overhead cost. Indicate whether each period cost is a selling expense or an administrative expense. p. Metal used for producing the airplane body q. Annual fee to a celebrity to promote the...
Sales of "El Manzano" are expected to be 4,300 units the following month. The sale price...
Sales of "El Manzano" are expected to be 4,300 units the following month. The sale price of each product is $ 70 pesos. The company likes to keep 25% of each month's sales as ending inventory. The initial inventory is 1,900 units and they cost him $ 50 pesos per unit. However the costs have changed and now they will cost you $ 55 pesos per unit. General expenses will be $ 53,000, interest will be paid for $ 8,000...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT