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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

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter6: Activity-based, Variable, And Absorption Costing
Section: Chapter Questions
Problem 14PA: Summarized data for Walrus Co. for its first year of operations are: A. Prepare an income statement...
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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 depreciation 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?

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 (partial) For Year Ended December 31 Per Unit Sales Variable costs: Total variable costs Contribution margin
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
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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