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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Sales
Variable costs:
Contribution margin
Fixed costs
Income
TIGHT DRUMS COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales
Variable costs:
TIGHT DRUMS COMPANY
Contribution Margin Income Statement (partial)
For Year Ended December 31
Total variable costs
Contribution margin
$ 500,000
< Required 2
Per Unit
places.)
For each dollar of sales, how much is left to cover fixed costs and contribute to income?
Respuimd 3>

Transcribed Image Text:The following costs result from the production and sale of 1,000 drum sets manufactured by Tight Drums Company for the year ended
December 31. The drum sets sell for $500 each
Variable costs
Plastic for casing
Wages of assembly workers
Drum stands
Sales commissions
Fixed costs
Taxes on factory
Factory maintenance
Factory machinery depreciation
Lease of equipment for sales staff
Accounting staff salaries
Administrative salaries
$ 17,000
82,000
26,000
15,000
5,000
10,000
40,000
10,000
35,000
125,000
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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