e http://ezto.mheducation.com/hm.tpx e Chapter 5 Homework . Conn.- | Chapter 5 H

Question

e http://ezto.mheducation.com/hm.tpx e Chapter 5 Homework . Conn.- | Chapter 5 Homework-Connect 5. 166 points Riverside Inc. makes one model of wooden canoe. Partial information for it follows 800 950 Number of Canoes Produced and Sold Total costs 600 $129,000 172,000 $204,250 Variable costs Foed costs 228,000228,000228,000 $357,000 400,000 $432,250 $ 215.00 $ 21500 s 215.00 s 59500 S 50000 455.00 Total costs Cost per unit Variable cost per unit Fixed cost per unit 380.00 295 00 240 00 Total cost per unit Riverside sells its canoes for $670 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 s entered as 12.34%) and all other answers to the nearest dollar amount) Scenario1 Raises Sales Price to $770 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 Contribution Mar Contribution Margin Net Operating Income

Explanation / Answer

SCENARIO 1 SCENARIO 2 SCENARIO 3 Selling Price per unit 770 737 670 Less: variable cost per unit 215 236.5 215 Unit contribution margin 555 500.5 455 CM ratio 72.10% 67.90% 67.90% CONTRIBUTION MARGIN INCOME STATEMENT Sales units 770000 737000 670000 Less: variable cost 215000 236500 215000 Contribution margin 555000 500500 455000 Less: Fixed cost 228000 228000 182400 (228000-20%) Net Income 327000 272500 272600

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