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

Question

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

Riverside Inc. makes one model of wooden canoe. Partial information for it follows Number of Canoes Produced and Sold Total costs 500 850 Variable costs Fixed costs $ 90,000 $ 126,000 $153,000 119,000 119,000 119,000 $209,000 245,000 $272,000 Total costs Cost per unit Variable cost per unit Fixed cost per unit $ 180.00 180.00 $ 180.00 170.00 140.00 S 418.00 $ 350.00 $ 320.00 238.00 Total cost per unit Riverside sells its canoes for $500 each. Next year Riverside expects to sell 1,000 canoes Required Complete the Riverside's contribution margin income statement for each independent scenario. Assuming each scenario is a variation of Riverside's original data. I answers to the nearest dollar amount.) Scenario 1 Raises Sales Price to $600 per Canoe Scenario 2 Increase Sales Price and Variable Cost per Unit by 10 Percent Scenario 3 Decrease Fixed Cost by 20 Percent Unit Contribution Margin Contribution Margin Ratio Contribution Margin Income Statement Contribution Margin Net Operating Income

Explanation / Answer

Scenario 1 Scenario 2 Scenario 3 Unit Contribution marin 420 352 320 Contribution margin Ration 70 % 64 % 64 % Contribution margin Income Statement Sales 600000 550000 500000 Less: Variable costs 180000 198000 180000 Contribution margin 420000 352000 320000 Less: Fixed costs 119000 119000 95200 Net Operating Income 301000 233000 224800

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