The following costs result from the production and sale of 4,300 drum sets manuf

Question

The following costs result from the production and sale of 4,300 drum sets manufactured by Tom Thompson Company for the year ended December 31, 2013. The drum sets sell for $280 each. The company has a 35% income tax rate Variable production costs Plastic for casing Wages of assembly workers Drum stands $ 98,900 378,400 137,600 Variable selling costs Sales commissions 90,300 Fixed manufacturing costs Taxes on factory Factory maintenance Factory machinery depreciation 13,000 26,000 86,000 Fixed selling and administrative costs Lease of equipment for sales staff Accounting staff salaries Administrative management salaries 26,000 76,000 156,000

Explanation / Answer

Contribution margin income statement Sales 1204000 Less: variable cost plastic for casting 98900 wages 378400 drum stands 137600 sales commission 90300 705200 Contribution margin 498800 Fixed cost taxes on factory 13000 factory maintenance 26000 factory machine depreciation 86000 lease 26000 accounting staff salaries 76000 administrative salaries 156000 Net income 115800 Contribution margin income statement(partial) per unit Sales 280 Less: variable cost plastic for casting 23 wages 88 drum stands 32 sales commission 21 164 Contribution margin 116

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