Riverside Inc. makes one model of wooden canoe. Partial information for it follo
ID: 2342208 • Letter: R
Question
Riverside Inc. makes one model of wooden canoe. Partial information for it follows:
Number of Canoes Produced and Sold
540
620
780
Total costs
Variable costs
$
67,500
$
77,500
$
97,500
Fixed costs
150,000
150,000
150,000
Total costs
$
217,500
$
227,500
$
247,500
Cost per unit
Variable cost per unit
$
125.00
$
125.00
$
125.00
Fixed cost per unit
277.78
241.94
192.31
Total cost per unit
$
402.78
$
366.94
$
317.31
Riverside sells its canoes for $500 each. Next year Riverside expects to sell 700 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. (Round your unit contribution margin and contribution margin ratio percentage to two decimal places (i.e. .1234 should be entered as 12.34%) and all other 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
Sales Revenue
Variable Costs
Contribution Margin
Fixed Costs
Net Operating Income
Number of Canoes Produced and Sold
540
620
780
Total costs
Variable costs
$
67,500
$
77,500
$
97,500
Fixed costs
150,000
150,000
150,000
Total costs
$
217,500
$
227,500
$
247,500
Cost per unit
Variable cost per unit
$
125.00
$
125.00
$
125.00
Fixed cost per unit
277.78
241.94
192.31
Total cost per unit
$
402.78
$
366.94
$
317.31
Riverside lne, makas one model ofExplanation / Answer
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 $ 475.00 $ 412.50 $ 375.00 Contribution Margin Ratio 79.17% % 75.00% % 75.00% % Contribution Margin Income Statement Sales Revenue $ 420,000.00 $ 385,000.00 $ 350,000.00 Variable Costs $ 87,500.00 96250 $ 87,500.00 Contribution Margin $ 332,500.00 $ 288,750.00 $ 262,500.00 Fixed Costs $ 150,000.00 $ 150,000.00 $ 120,000.00 Net Operating Income $ 182,500.00 $ 138,750.00 $ 142,500.00 Contribution Margin $ 332,500.00 $ 288,750.00 $ 262,500.00 Number of Units Sold 700.00 700.00 700.00 Unit Contribution Margin $ 475.00 $ 412.50 $ 375.00 Contribution Margin Ratio 79.17% 75.00% 75.00%
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