The following costs result from the production and sale of 4,450 drum sets manufactured by Tight Drums Company for the year ended December 31. The drum sets sell for $295 each. Variable costs Plastic for casing $ 115,700 Wages of assembly workers 404,950 Drum stands 155,750
The following costs result from the production and sale of 4,450 drum sets manufactured by Tight Drums Company for the year ended December 31. The drum sets sell for $295 each. Variable costs Plastic for casing $ 115,700 Wages of assembly workers 404,950 Drum stands 155,750
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 14PA: Summarized data for Walrus Co. for its first year of operations are: A. Prepare an income statement...
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The following costs result from the production and sale of 4,450 drum sets manufactured by Tight Drums Company for the year ended December 31. The drum sets sell for $295 each.
Variable costs | |
---|---|
Plastic for casing | $ 115,700 |
Wages of assembly workers | 404,950 |
Drum stands | 155,750 |
Sales commissions | 106,800 |
Fixed costs | |
Taxes on factory | 14,500 |
Factory maintenance | 29,000 |
Factory machinery depreciation | 89,000 |
Lease of equipment for sales staff | 29,000 |
Accounting staff salaries | 79,000 |
Administrative salaries | 159,000 |
Required:
1. Prepare a contribution margin income statement for the year.
2. Compute contribution margin per unit and contribution margin ratio.
3. For each dollar of sales, how much is left to cover fixed costs and contribute to income?
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