http:/esto.mheducation.. -dCh5HW You did not receive full credit for this questi

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http:/esto.mheducation.. -dCh5HW You did not receive full credit for this question in a previous attempt 116 points Riverside Inc. makes one model of wooden canoe. Partial information for it follows Number of Canoes Produced and Sold450650 800 Total costs s 67,500 S 97,500 $120,000 374 400374.400 374.400 $441,900 471,900 $494,400 Variable costs Fxed costs Total costs Cost per unit Variable cost per unt Fixed cost per unit s 15000 $ 15000 15000 83200576.00468 00 $ 982.00 726.00 S 618.00 57600 Total cost per unit Riverside sells its canoes for $1,100 each. Next year Riverside expects to sell 1,000 canoes Required: Complete the Riverside's contribution margin income statement for each independent scenario Assuming each scenarnio is a variation of Riverside's original data (Round your unit contribution margin and contribution margin ratio to two decimal places (ie, .1234 should be entered as 12.34%) and all other answers to the nearest dollar amount.) Scenario 1 Raises Sales Price to $1200 per Canoe Scenario 2 Increase Sales Price and Variable Cost per Unit by 10 Percent Scenario 3 Decrease Fixed Cost by 20 Percent Unit Contribution Margin Contribution Margin Ratio Contibution Margin Net Operating Income

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Solution:

Particulars Scenario 1: Raises selling price to $1,200 per Canoe Scenario 2: Increase selling price and variable cost per unit by 10% Scenario 3: Decrease fixed costs by 20% Selling price per unit $1,200.00 $1,210.00 $1,100.00 Variable cost per unit $150.00 $165.00 $150.00 Unit contribution margin $1,050.00 $1,045.00 $950.00 Contribution margin ratio 87.50% 86.36% 86.36% Contribution margin Income Statement Sales $1,200,000.00 $1,210,000.00 $1,100,000.00 Variable costs $150,000.00 $165,000.00 $150,000.00 Contribution margin $1,050,000.00 $1,045,000.00 $950,000.00 Fixed Costs $374,400.00 $374,400.00 $449,280.00 Net Operating income $675,600.00 $670,600.00 $500,720.00

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