Riverside Inc. makes one model of wooden canoe. Partial information for it follo
ID: 2432360 • Letter: R
Question
Riverside Inc. makes one model of wooden canoe. Partial information for it follows: Number of Canoes Produced and Sold 450 650 800 Total costs Variable costs Fixed costs 63,000 91,000 112,000 187 200 187.200 187 200 $250,200 278,200 $299,200 Total costs Cost per unit s 140.00 140.00 140.00 Variable cost per unit Fixed cost per unit 416.00 288.00 234.00 Total cost per unit $ 556.00 428.00 374.00 Riverside sells its canoes for $700 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 scen contribution margin and contribution margin ratio to two decimal places (i.e. 1234 should be entered as 12.34 Scenario 1 Ralses Sales Price to $800 per Canoe Scenario 2 Increase Sales Price and Variable Cost per Unit by 10 Percent Scenarlo 3 Fixed Cost by 20 Percent Unit Contribution Margin Contribution Margin Ratio 2 4Explanation / Answer
Scenario 1-Raises sales Price to $1000 per canoe
Scenario 2 Increase sales price and variable cost per unit by 10%
Scenario 3-Derease Fixed cost by 20%
Unit Contribution Margin
$ 660,000.00
$ 616,000.00
$ 560,000.00
Contribution Margin ratio
82.50%
80.00%
80.00%
Contribution Margin Income Statement
Sales
$ 800,000.00
$ 770,000.00
$ 700,000.00
Less: Variable Cost
$ 140,000.00
$ 154,000.00
$ 140,000.00
Contribution Margin
$ 660,000.00
$ 616,000.00
$ 560,000.00
Less: Fixed Cost
$ 187,200.00
$ 187,200.00
$ 149,760.00
Net Operating Income
$ 472,800.00
$ 428,800.00
$ 410,240.00
Scenario 2 sales Price=
($700+10%)
$ 770.00
Scenario 2 variable cost per Unit=
($140+10%)
$ 154.00
Contribution margin = (contribution/Sales)
Scenario 1-Raises sales Price to $1000 per canoe
Scenario 2 Increase sales price and variable cost per unit by 10%
Scenario 3-Derease Fixed cost by 20%
Unit Contribution Margin
$ 660,000.00
$ 616,000.00
$ 560,000.00
Contribution Margin ratio
82.50%
80.00%
80.00%
Contribution Margin Income Statement
Sales
$ 800,000.00
$ 770,000.00
$ 700,000.00
Less: Variable Cost
$ 140,000.00
$ 154,000.00
$ 140,000.00
Contribution Margin
$ 660,000.00
$ 616,000.00
$ 560,000.00
Less: Fixed Cost
$ 187,200.00
$ 187,200.00
$ 149,760.00
Net Operating Income
$ 472,800.00
$ 428,800.00
$ 410,240.00
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