Question

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

Number of Canoes Produced and Sold
		505		655		805
Total costs
Variable costs	$	66,660		?		?
Fixed costs		148,400		?		?
Total costs	$	215,060		?		?
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.)   

	Number of Canoes Produced and Sold 505 655 805 Total Costs Variable Costs $66,660 Fixed Costs 148,400 Total Costs $215,060 $0 $0 Cost per Unit Variable Cost per Unit Fixed Cost per Unit Total Cost per Unit $0.00 $0.00 $0.00

3. Suppose Riverside sells its canoes for $512 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.)

	Unit Contribution Margin Contribution Margin Ratio %

4. Next year Riverside expects to sell 855 canoes. Complete the contribution margin income statement for the company.

	RIVERSIDE INC. Contribution Margin Income Statement For the Next Year Contribution Margin Net Operating Income

Answer 1

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

	Number of Canoes Produced and Sold 505 655 805 Total Costs Variable Costs $66,660 86460 106260 Fixed Costs 148,400 148400 148400 Total Costs $215,060 $234860 $254660 Cost per Unit Variable Cost per Unit 132 132 132 Fixed Cost per Unit 293.86 226.56 184.35 Total Cost per Unit $425.86 $358.56 $316.35

3) Unit contribution margin = 512-132 = $380

Contribution margin ratio = 380/512 = 75%

4. Next year Riverside expects to sell 855 canoes. Complete the contribution margin income statement for the company.

	RIVERSIDE INC. Contribution Margin Income Statement For the Next Year Sales (855*512) 437760 Variable cost (855*132) 112860 Contribution Margin 324900 Fixed cost 148400 Net Operating Income 176500