Question 8 (of 10) 8. 200 points value: The following costs result from the prod

Question

Question 8 (of 10) 8. 200 points value: The following costs result from the production and sale of 4,750 drum sets manufactured by Tight Drums Company for the year ended December 31, 2015. The drum sets sell for $325 each. The company has a 40% income tax rate Variable production costs Plastic for casing Wages of assembly workers Drum stands $ 152,000 460,750 194,750 Variable selling costs Sales commissions 142,500 Fixed manufacturing costs Taxes on factory Factory maintenance Factory machinery depreciation 7,500 15,000 75,000 Fixed selling and administrative costs Lease of equipment for sales staff Accounting staff salaries Administrative management salaries 15,000 65,000 145,000

Explanation / Answer

Particulars Amt Sale Price (A) 325 Less: Variable Cost Plastic for casting (152000/4750) 32 Wages for assembly workers (460750/4750) 97 Drum Stands (194750/4750) 41 Sales Commissions (142500/4750) 30 Contribution Margin (B) 125 Contribution Margin Ratio (B/A) 38%

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