The following costs result from the production and sale of 4,550 drum sets manufactured by Tight Drums Company for the year ended December 31, 2015. The drum sets sell for $305 each. The company has a 40% income tax rate.
Variable production costs
Plastic for casing $ 127,400
Wages of assembly workers 423,150
Drum stands 168,350
Variable selling costs
Sales commissions 118,300
Fixed manufacturing costs
Taxes on factory 9,500
Factory maintenance 19,000
Factory machinery depreciation 79,000
Fixed selling and administrative costs
Lease of equipment for sales staff 19,000
Accounting staff salaries 69,000
Administrative management salaries 149,000
Required:
1. Prepare a contribution margin income statement for the company.
2. Compute its contribution margin per unit and its contribution margin ratio. (Round Contribution margin ratio to nearest whole percentage.)
1.
| Sales ($305 × 4,550) = $1,387,750 |
| Income tax (206,050 × 40%) = $82,420 |
hello, this might be a year late but how did you calculate the variable costs? thanks
ReplyDeletedivide each variable cost by 4,550.
ReplyDeletehow did you get the pretax
ReplyDeleteTo get the pretax you have to subtract the total fixed cost from the contribution margin.
Deletehow did you get the 100% and 60% and 40%
ReplyDeleteAter you calculate the contribution margin the 100% will automactically pop up...
ReplyDeleteFor the variable percent and the contribution margin percent you will need to calculate:
(variable ÷ sales)= (184/305)= .60% and (contribution margin ÷sales)= (121/305)= .39 (don't forget to round your answers)= .40%
How you get plastic casing
ReplyDeleteHow you got 28 for plastic casing ??
ReplyDelete