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ion.com/tlow/connect.html : Apps Enter your password D H - See What's Hot Imported From lE P 18-1 Connect HW6 Red Wing Leather Be Saved Help Save & Exit Submit Check my work The following costs result from the production and sale of 4,950 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017, The drum sets sell for $345 each The company has a 40% income tax rate. Variable production costs 10 polnts Plastic for casing Wages of assembly workers Drum stands $ 178,200 499,958 222,7508 Skipped Variable selling costs Sales commissions 168,306 Fixed manufacturing costs Taxes on factory Factory maintenance Factory machinery depreciation 5,508 11,800 71,800 eBook Print Fixed selling and administrative costs Lease of equipment for sales staff Accounting staff salaries Administrative management salaries 11,000 61,000 141,980 References Required: 1. Prepare a contribution margin income statement for the company 2. Compute its contribution margin per unit and its contribution margin ratio. Complete this question by entering your answers in the tabs below. Prey 1 of 1 Next O Type here to searchExplanation / Answer
Solution 1:
Solution 2:
Contribution margin per unit = Selling price per unit - Variable cost per unit = $345 - $216 = $129 per unit
Contribution margin ratio = Contribution per unit / Selling price per unit = $129 / $345 = 37.3913%
Tight Drums Company Contribution Margin Income Statement For year ended December 31, 2017 Particulars Per Unit Amount Sales $345.00 $1,707,750.00 Variable Costs: Plastic for Casing $36.00 $178,200.00 Wages for assembly workers $101.00 $499,950.00 Drum Stands $45.00 $222,750.00 Sales Commissions $34.00 $168,300.00 Contribution Margin $129.00 $638,550.00 Fixed Costs: Taxes on Factory $5,500.00 Factory Maintenance $11,000.00 Factory Machinery Depreciation $71,000.00 Lease of equipment for sales staff $11,000.00 Accounting Staff Salaries $61,000.00 Administrative Management Salaries $141,000.00 Net Operating Income $338,050.00 Income Tax (40%) $135,220.00 Earnings After Tax $202,830.00Related Questions
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