e http// manufactures one model of birdbath, which is very popular. Morming Dove
ID: 2433127 • Letter: E
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e http// manufactures one model of birdbath, which is very popular. Morming Dove sells all units it produces each month Morning Dove The relevant range is 0-2,400 units, and monthly production costs for the production of 1,900 units follow Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Direct materials Direct labor Ubibes ($140 fixed) Supervisors salary Maintenance (5260 txed) Depreciation s 2,100 7,500 600 2,800 500 700 Suppose i sells each birdbath for $26 Required: 1. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. (Round Variable cost per unit to 2 decimal places. Enter all amounts as positive values.) Price Unit Contribution Margin 26 00 per Birdbath |Cort, bution Margin Rabo 2. Complete the contribution margin income statement assuming that Morning Dove produces and sells 2,100 units. (Round your intermediate calculation to two decimal place. Contribution Margin Income Statement Expected for 2,100 Units Contibution Margn Net Operatieg IncomeExplanation / Answer
Variable cost per unit Fixed cost Direct materials 2100 Utilities 140 Direct Labor 7500 Supervisor salary 2800 Utilities (600-140) 460 Maintenance 260 Maintenance (500-260) 240 Depreciation 700 Total variable cost 10300 Total Fixed cost 3900 Units 1900 Variable cost per unit 5.42 Part-(1) Unit contribution margin = (Sales price – Variable cost per unit) = (26-5.42) = $20.58 per birdbath Contribution margin ratio = (Unit contribution margin / Sales price) = (20.58/26) = 79.15% Part-(2) MORNING DOVE COMPANY Contribution Margin Income Statement Expected for 2100 units Sales revenue 54600 (2100*26) Variable cost -11382 (2100*5.42) Contribution margin 43218 (2100*20.58) Fixed Costs -3900 Net operating income 39318
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