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 to 1,700 units, and monthly production costs for the production of 1,300 units follow. Morning Dove’s utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Total Cost Direct materials $ 2,700 Direct labor 6,700 Utilities ($140 fixed) 620 Supervisor’s salary 3,000 Maintenance ($350 fixed) 490 Depreciation 800 Suppose it sells each birdbath for $20. Required: Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,500 units.
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 to 1,700 units, and monthly production costs for the production of 1,300 units follow. Morning Dove’s utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Total Cost Direct materials $ 2,700 Direct labor 6,700 Utilities ($140 fixed) 620 Supervisor’s salary 3,000 Maintenance ($350 fixed) 490 Depreciation 800 Suppose it sells each birdbath for $20. Required: Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,500 units.
Chapter3: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 2PB: A company manufactures and sells blades that are used in riding lawnmowers. The 18-inch blade sells...
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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 to 1,700 units, and monthly production costs for the production of 1,300 units follow. Morning Dove’s utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Total Cost Direct materials $ 2,700 Direct labor 6,700 Utilities ($140 fixed) 620 Supervisor’s salary 3,000 Maintenance ($350 fixed) 490 Depreciation 800 Suppose it sells each birdbath for $20. Required: Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,500 units.
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