Morning Dove Company manufactures one model of birdbath, which is very popular.

Question

Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0-2,200 units, and monthly production costs for the production of 1,800 units follow. Moming Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities (S130 fixed) Supervisor's salary Maintenance (S310 fixed) Depreciation Total Cost S 2,900 6,700 3,500 530 850 Suppose it sells each birdbath for $20 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.) Unit Contribution Margin per Birdbath Contribution Margin Ratio 2. Complete the contribution margin income statement assuming that Morning Dove produces and sells 2,000 units. (Round your intermediate calculation to two decimal place.) MORNING DOVE COMPANY Contribution Margin Income Statement Expected for 2,000 Units Contribution Margirn Net Operating Income

Explanation / Answer

1.

2.

Direct material cost per unit ($2,900/1,800) $ 1.61 Direct labour cost per unit ($6,700/1,800) $ 3.72 Utilities expense per unit (($610-$130)/1,800) $ 0.27 Maintenance cost per unit (($530-$310)/1,800) $ 0.12 Variable cost pe runit $ 5.72

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