The following costs result from the production and sale of 5,000 drum sets manufactured by Tight Drums Company for the year ended December 31, 2015. The drum sets sell for $350 each. The company has a 25% 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 Sales Variable costs: Total variable costs. Contribution margin Fixed costs $ 185,000 510,000 230,000 Total fixed costs 175,000 5,000 10,000 70,000 10,000 Required: 1. Prepare a contribution margin income statement for the company. 60,000 140,000 TIGHT DRUMS COMPANY Contribution Margin Income Statement For Year Ended December 31, 2015 $
The following costs result from the production and sale of 5,000 drum sets manufactured by Tight Drums Company for the year ended December 31, 2015. The drum sets sell for $350 each. The company has a 25% 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 Sales Variable costs: Total variable costs. Contribution margin Fixed costs $ 185,000 510,000 230,000 Total fixed costs 175,000 5,000 10,000 70,000 10,000 Required: 1. Prepare a contribution margin income statement for the company. 60,000 140,000 TIGHT DRUMS COMPANY Contribution Margin Income Statement For Year Ended December 31, 2015 $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:2. Compute its contribution margin per unit and its contribution margin ratio. (Round Contribution margin
ratio to nearest whole percentage.)
Sales
Variable costs:
TIGHT DRUMS COMPANY
Contribution Margin Income Statement (partial)
For Year Ended December 31, 2015
Total variable costs
Contribution margin
Per Unit
x |||*

Transcribed Image Text:The following costs result from the production and sale of 5,000 drum sets manufactured
by Tight Drums Company for the year ended December 31, 2015. The drum sets sell for
$350 each. The company has a 25% 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
Sales
Variable costs:
Total variable costs
Contribution margin
Fixed costs
$ 185,000
510,000
230,000
Total fixed costs
175,000
5,000
10,000
70,000
10,000
Required:
1. Prepare a contribution margin income statement for the company.
60,000
140,000
TIGHT DRUMS COMPANY
Contribution Margin Income Statement
For Year Ended December 31, 2015
$
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