Question

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

Number of Canoes Produced and Sold
		545		695		845
Total costs
Variable costs	$	77,935		?		?
Fixed costs		148,100		?		?
Total costs	$	226,035		?		?
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.)   



3. Suppose Riverside sells its canoes for $510 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.)


4. Next year Riverside expects to sell 895 canoes. Complete the contribution margin income statement for the company.

Answer 1

Answer:-1)-

Number of Canoes Produced & Sold	545	695	845
Total costs
Variable costs $	77935	695 canoes*$143 per unit=99385	845 canoes*$143 per unit=120835
Fixed costs $	148100	655 canoes*$213.09 per unit=148100	805 canoes*$175.27 per unit=148100
Total costs	226035	247485	268935
Cost per unit
Variable Cost per unit	143	143	143
Fixed Cost per unit	271.74	213.09	175.27
Total Cost per unit	414.74	356.09	318.27

2)-

Unit contribution margin = Selling price per unit-Variable cost per unit

Unit contribution margin per canoes =$510-$143 per unit=$367 per unit

Contribution margin ratio = Contribution margin per unit/Selling price per unit*100

                                           =$367 per unit/$510 per unit*100

                                           =71.96%

3)-

RIVERSIDE INC.
CONTRIBUTION MARGIN INCOME STATEMENT
FOR THE NEXT YEAR
PARTICULARS		AMOUNT
Sales value	895 canoes*$510 per unit	456450
Less:- Variable cost	895 canoes*$143 per unit	127985
Contribution Margin		328465
Less:- Fixed cost		148100
Net opreating Income		180365