Sandy Bank, Inc., makes one model of wooden canoe. Partial information for it fo

Question

Sandy Bank, Inc., makes one model of wooden canoe. Partial information for it follows: Required 1. Complete the following table. (Round your "Cost per Unit" answers to 2 decimal places.) Total cost 61.920 Fixed Costs Total Costs Cost per Uni 202,100 per Unt Fixed Cost per Total Cost per Unt 2. Suppose Sandy Bank sells its canoes for $570 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your intermediate calculations and final answers to 2 decimal places. Round your "percentage" answer to 2 decimal places. (i.e. .1234 should be entered as 12.34%.)) per Canoe Contribution Margin Ratio 3. This year Sandy Bank expects to sell 830 canoes. Prepare a contribution margin income statement for the company. (Round your intermediate calculations to 2 decimal places.) BANK Margin Income Statement For the Current Year Contribuion Mangin Inoome from Operaions

Explanation / Answer

Sandy Bank Inc

1

Complete the following table:

Number of Canoes Produced and Sold

430

600

700

Total Costs:

Variable Costs

$61,920

$86,400

$100,800

Fixed costs

$140,180

$140,180

$140,180

Total costs

$202,100

$226,580

$240,980

Cost per unit:

Variable cost per unit

$144

$144

$144

Fixed cost per unit

$326

$233.63

$200.25

Total cost per unit

$470

$377.63

$344.25

Variable cost per unit is calculated as follows,

$61,920/430 units = $144

Since variable cost per unit remains constant at any level of activity, the variable cost per unit for 430, 600 and 700 units remains at $144.

Fixed cost per unit is calculated as follows,

Total cost fixed cost = $140,180

Fixed cost per unit for 430 units = 140,180/430 = $236

Fixed cost per unit for 600 units = 140,180/600 = $233.6

Fixed cost per unit for 700 units = 140,180/700 = $200.25

Since, fixed cost per unit does not remain constant the same cannot be applied for all levels of activity. However, total fixed cost remains unchanged for any level of activity.

Contribution margin determination -

Sales price

$570

variable cost per canoe

$144

Contribution margin

$426

CM ratio

CM/sales price

74.74%

Contribution margin income statement for an activity level of 830 canoes

Sales

$473,100

Variable cost

$119,520

Contribution

$353,580

Less: Fixed cost

$140,180.00

Net Income

$213,400

Notes –

Sales = number of canoes x unit sales price = 830 x $570 = $473,100

Variable cost = 830 x $144 = 119,520

CM = sales – variable cost = 473,100 – 119,520 = $353,580

1

Complete the following table:

Number of Canoes Produced and Sold

430

600

700

Total Costs:

Variable Costs

$61,920

$86,400

$100,800

Fixed costs

$140,180

$140,180

$140,180

Total costs

$202,100

$226,580

$240,980

Cost per unit:

Variable cost per unit

$144

$144

$144

Fixed cost per unit

$326

$233.63

$200.25

Total cost per unit

$470

$377.63

$344.25

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