Riverside Inc. makes one model of wooden canoe. Partial information for it follo

Question

Riverside Inc. makes one model of wooden canoe. Partial information for it follows:

Required:
1. Complete the table. (Round your cost per unit answers to 2 decimal places.)   

3. Suppose Riverside sells its canoes for $504 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your contribution margin to the nearest whole dollar and your contribution margin ratio to the nearest whole percent.)

4. Next year Riverside expects to sell 805 canoes. Complete the contribution margin income statement for the company.

RIVERSIDE INC.

Contribution Margin Income Statement

For the Next Year

Number of Canoes Produced and Sold 455 605 755 Total costs Variable costs $ 66,885 ? ? Fixed costs 149,800 ? ? Total costs $ 216,685 ? ? Cost per unit Variable cost per unit ? ? ? Fixed cost per unit ? ? ? Total cost per unit ? ? ?

Explanation / Answer

1 Number of Canoes Produced and Sold 455 605 755 Total Costs Variable Costs 66,885.00 88935 110985 Fixed Costs 149,800.00 149,800.00 149,800.00 Total Costs(Variable + Fixed ) 216,685.00 238,735.00 260,785.00 Cost per Unit Variable Cost per Unit (Variable Cost/Number of Canoes) 147 147 147 Fixed Cost per Unit (Fixed Cost/Number of Canoes) 329.23 247.60 198.41 Total Cost per Unit 476.23 394.60 345.41 Calculation of Variable Cost per unit = Variable cost/Number of Canoes = 66885/455=147 3 Calculate the contribution margin per canoe and Contribution margin ratio when sale price is 504 Sale Price 504 Less - Variable Cost 147 Contribution per canoe 357 Contribution margin ratio(Contribution per unit/Sales per unit) 70.83% 4 RIVERSIDE INC. Contribution Margin Income Statement For the Next Year Price per Canoe No of Canoes Price * Canoe Sale Price 504 805 405720 Less - Variable Cost 147 805 118335 Contribution 357 805 287385 Contribution margin ratio(Contribution per unit/Sales per unit) 70.83% Less - Fixed Cost 149,800 Net Operating Income 137,585 ?

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