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The following costs result from the production and sale of 4,050 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $255 each. The company has a 30% Income tax rate. Variable production costs Plastic for casing Wages of assembly workers Drum stands Variable selling costs Sales commissions Fixed manufacturing costs Taxes on factory Factory maintenance Factory machinery depreciation Fixed selling and administrative costs Lease of equipment for sales staff Accounting staff salaries Administrative management salaries $ 72,900 336, 150 109, 350 64,800 10, 500 21,000 81,000 21,000 71,000 151,000 Required: 1. Prepare a contribution margin income statement for the year. 2. Compute its contribution margin per unit and its contribution margin ratio. 3. For each dollar of sales, how much is left to cover fixed costs and contribute to operating income?

The following costs result from the production and sale of 4,050 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $255 each. The company has a 30% Income tax rate. Variable production costs Plastic for casing Wages of assembly workers Drum stands Variable selling costs Sales commissions Fixed manufacturing costs Taxes on factory Factory maintenance Factory machinery depreciation Fixed selling and administrative costs Lease of equipment for sales staff Accounting staff salaries Administrative management salaries $ 72,900 336, 150 109, 350 64,800 10, 500 21,000 81,000 21,000 71,000 151,000 Required: 1. Prepare a contribution margin income statement for the year. 2. Compute its contribution margin per unit and its contribution margin ratio. 3. For each dollar of sales, how much is left to cover fixed costs and contribute to operating income?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following costs result from the production and sale of 4,050 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $255 each. The company has a 30% Income tax rate. Variable production costs Plastic for casing. Wages of assembly workers. Drum stands Variable selling costs Sales commissions Fixed manufacturing costs Taxes on factory Factory maintenance. Factory machinery depreciation Fixed selling and administrative costs. Lease of equipment for sales staff. Accounting staff salaries Administrative management salaries $ 72, 900 336, 150 109, 350 64, 800 10, 500 21,000 81,000 21,000 71,000 151,000 Required: 1. Prepare a contribution margin income statement for the year. 2. Compute its contribution margin per unit and its contribution margin ratio. 3. For each dollar of sales, how much is left to cover fixed costs and contribute to operating income?
Transcribed Image Text:The following costs result from the production and sale of 4,050 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $255 each. The company has a 30% Income tax rate. Variable production costs Plastic for casing. Wages of assembly workers. Drum stands Variable selling costs Sales commissions Fixed manufacturing costs Taxes on factory Factory maintenance. Factory machinery depreciation Fixed selling and administrative costs. Lease of equipment for sales staff. Accounting staff salaries Administrative management salaries $ 72, 900 336, 150 109, 350 64, 800 10, 500 21,000 81,000 21,000 71,000 151,000 Required: 1. Prepare a contribution margin income statement for the year. 2. Compute its contribution margin per unit and its contribution margin ratio. 3. For each dollar of sales, how much is left to cover fixed costs and contribute to operating income?
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