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? lii Secure l https://newconnectmheducation.com/flow/connect.html Enter your password?HP-see what's Hot?lmported From IE -) -Red Wing Leather Be Final Exam (P18-1 6 Help Save& Exit Submit The following costs result from the production and sale of 4,650 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017 The drum sets sell for $315 each The company has a 30% income tax rate Variable production costs Plastic for casing Wages of assenbly workers Drum stands s 139, see 441,758 181,350 Variable selling costs sales commissions 138, 288 Fixed manufacturing costs B,500 Taxes on factory Factory maintenance Factory machinery depreciation 17,ee 77,0e8 Fixed selling and administrative costs Lease of equipment for sales staff Accounting staff salaries Administrative management salaries 17,889 67,8e9 147,800 Required 1. Prepare a contribution margin income statement for the company 2. Compute its contribution margin per unit and its contribution margin retio Prey 1 or1 Next

Explanation / Answer

ans 1 Contribution Margin Income Statement Sales (4650*315) $1,464,750 Less: Variable cost   Plastic for casing $139,500      Wages of assembly workers 441750      Drum stands 181350      Sales commissions 130200 Total Variable cost $892,800 Contribution Margin C $571,950 Fixed cost      Taxes on factory 8500      Factory maintenance 17000      Factory machinery depreciation 77000      Lease of equipment for sales staff 17000      Accounting staff salaries 67000      Administrative management salaries 147000 Total Fixed cost F 333500 Pretax Income P=C-F $238,450 Income Tax (30%*P) $71,535 Net Income $166,915 ans 2 Contribution Margin Income Statement Sales $315 Less: Variable cost   Plastic for casing (139500/4650) $30      Wages of assembly workers (441750/4650) $95      Drum stands (181350/4650) $39      Sales commissions $28 Total Variable cost $192 Contribution Margin per unit C $123 Contribution margin ratio Sales 315 100% Variable cost (192/315*100) $192 61 Contribution Margin per unit C $123 39 %

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