E5-14 Determining Cost Behavior, Preparing Contribution Margin Income Statement

Question

E5-14 Determining Cost Behavior, Preparing Contribution Margin Income Statement [LO 5-1, 5-5]

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 $508 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 825 canoes. Complete the contribution margin income statement for the company.

Number of Canoes Produced and Sold 475 625 775 Total costs Variable costs $ 65,550 ? ? Fixed costs 148,700 ? ? Total costs $ 214,250 ? ? Cost per unit Variable cost per unit ? ? ? Fixed cost per unit ? ? ? Total cost per unit ? ? ?

Explanation / Answer

1)

Note the fixed cost remain same irrespective of number of unit

Total cost = fixed cost + variable cost

Number of Canoes Produced and Sold 475 625 775 Total costs Variable costs $ 65,550 86250 106950 Fixed costs 1,48,700 1,48,700 1,48,700 Total costs $ 2,14,250 2,34,950 2,55,650 Cost per unit Variable cost per unit 138 138 138 Fixed cost per unit 313.052632 237.92 191.870968 Total cost per unit 451.052632 375.92 329.870968

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