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Problem 5-1A Contribution margin income statement and contribution margin ratio LO A1 The following costs result...

Problem 5-1A Contribution margin income statement and contribution margin ratio LO A1

The following costs result from the production and sale of 4,500 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $300 each. The company has a 35% income tax rate.

  

Variable production costs
Plastic for casing $ 121,500
Wages of assembly workers 414,000
Drum stands 162,000
Variable selling costs
Sales commissions 112,500
Fixed manufacturing costs
Taxes on factory 15,000
Factory maintenance 30,000
Factory machinery depreciation 90,000
Fixed selling and administrative costs
Lease of equipment for sales staff 30,000
Accounting staff salaries 80,000
Administrative management salaries 160,000

Required:

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

Prepare a contribution margin income statement for the company.
TIGHT DRUMS COMPANY
Contribution Margin Income Statement
For Year Ended December 31, 2017
Sales
Variable costs:
Total variable costs
Contribution margin
Fixed costs
Total fixed costs

Compute its contribution margin per unit and its contribution margin ratio. (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
Variable costs:
Total variable costs
Contribution margin

Solutions

Expert Solution

ekkarill92 answered 1 year ago
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