Question

Riverside Inc. makes one model of wooden canoe. Partial information for it follows: Number of Canoes Produced and sold 545 695 845 Total costs Variable costs $ 71,940 Fixed costs 148,600 Total costs $220,540 Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit Required: 1. Complete the table. 3. Suppose Riverside sells its canoes for $517 each. Calculate the contribution margin per canoe and the contribution margin ratio. 4. Next year Riverside expects to sell 895 canoes. Complete the contribution margin income statement for the company, Complete this question by entering your answers in the tabs below.

Answer 1

C D E 545 695 845 No. of canoes produced and sold Total costs: Variable costs Fixed costs Total costs Cost per unit Variable costs per unit Fixed costs per unit Total cost per unit $ 71,940 $ 91,740 $ 111,540 $ 148,600 $ 148,600 $ 148,600 $ 220,540 $ 240,340 $ 260,140 $ 132.00 $ 272.66 $ 404.66 $ 132.00 $ 132.00 $213.81 $175.86 $ 345.81 $ 307.86 Unit contribution margin ($517-$132) Contribution margin ratio ($385/$517)x100 $385 74% RIVERSIDE INC. Contribution margin income statement For the next year Sales revenue (895 x$517) 462,715 Less: Variable cost (895 x $132) 118,140 Contribution margin 344,575 less: Fixed costs 148,600 Net operating income 195,975

Working note:

C D E 545 695 845 No. of canoes produced and sold Total costs: Variable costs Fixed costs Total costs Cost per unit Variable costs per unit Fixed costs per unit Total cost per unit 71940 148600 220540 =D8*D2 =E8*E2 148600 148600 =D4+D5 =E4+E5 =C4/C2 =C5/C2 =C8+C9 =C8 =C8 =D5/D2 =E5/E2 =D8+D9 =E8+E9 Unit contribution margin ($517-$132) Contribution margin ratio ($385/$517)x100 =517-132 | =385/517 RIVERSIDE INC. Contribution margin income statement For the next year Sales revenue (895 x$517) =895*517 Less: Variable cost (895 x $132) =895*132 Contribution margin =C19-C20 less: Fixed costs 148600 Net operating income =C21-C22