The following costs result from the production and sale of 4,450 drum sets manufactured by Tight Drums Company for the year ended December 31. The drum sets sell for $295 each. Variable costs Plastic for casing $ 115,700 Wages of assembly workers 404,950 Drum stands 155,750
The following costs result from the production and sale of 4,450 drum sets manufactured by Tight Drums Company for the year ended December 31. The drum sets sell for $295 each. Variable costs Plastic for casing $ 115,700 Wages of assembly workers 404,950 Drum stands 155,750
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The following costs result from the production and sale of 4,450 drum sets manufactured by Tight Drums Company for the year ended December 31. The drum sets sell for $295 each.
| Variable costs | |
|---|---|
| Plastic for casing | $ 115,700 |
| Wages of assembly workers | 404,950 |
| Drum stands | 155,750 |
| Sales commissions | 106,800 |
| Fixed costs | |
| Taxes on factory | 14,500 |
| Factory maintenance | 29,000 |
| Factory machinery |
89,000 |
| Lease of equipment for sales staff | 29,000 |
| Accounting staff salaries | 79,000 |
| Administrative salaries | 159,000 |
Required:
1. Prepare a contribution margin income statement for the year.
2. Compute contribution margin per unit and contribution margin ratio.
3. For each dollar of sales, how much is left to cover fixed costs and contribute to income?
Transcribed Image Text:TIGHT DRUMS COMPANY
Contribution Margin Income Statement (partial)
For Year Ended December 31
Per Unit
Sales
Variable costs:
Total variable costs
Contribution margin
Transcribed Image Text:TIGHT DRUMS COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales
Variable costs:
Plastic for casing
Wages of assembly workers
Drum stands
Sales commissions
Contribution margin
Fixed costs
Taxes on factory
Factory maintenance
Factory machinery depreciation
Lease of equipment for sales staff
Accounting staff salaries
Administrative salaries
Income
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