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
Fixed manufacturing costs
Taxes on factory      5,500
Factory maintenance      11,000
Factory machinery depreciation      71,000
Fixed selling and administrative costs
Lease of equipment for sales staff      11,000
Accounting staff salaries      61,000
Administrative management salaries      141,000

Required:
1. Prepare a contribution margin income statement for the company.
2. Compute its contribution margin per unit and its contribution margin ratio.

Solutions

Expert Solution

ekkarill92 answered 1 year ago

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