Question

Riverside Inc. makes one model of wooden canoe. Partial information for it follows: 550 750 900 Number of Canoes Produced and Sold Total costs Variable costs Fixed costs Total costs Cost per unit Variable cost per unit Fixed cost per unit Total cost per unit $ 110,000 99,000 $ 209,000 $150,000 99,000 $ 249,000 $180,000 99,000 $279,000 $ 200.00 180.00 $ 380.00 $ 200.00 $ 200.00 132.00 110.00 $ 332.00 $ 310.00 Riverside sells its canoes for $460 each. Next year Riverside expects to sell 1,000 canoes. Required: Complete the Riverside's contribution margin income statement for each independent scenario. Assuming each scenario is a variation of Riverside's original data. (Round your unit contribution margin and contribution margin ratio to 2 decimal places (.e. 1234 should be entered as 12.34%) and all other answers to the nearest dollar amount.) Scenario 1 Raises Sales Price to $560 per Canoe Scenario 2 Increase Sales Price and Variable Cost per Unit by 10 Percent Scenario 3 Decrease Fixed Cost by 20 Percent Unit Contribution Margin Contribution Margin Ratio % Contribution Margin Income Statement Contribution Margin Net Operating Income

Answer 1

	Scenario 1	Scenario 2	Scenario 3
	Raises Sales Price	Increase Sales Price	Decrease Fixed Costs
	to $560 per canoe	and Variable cost	by 20%
		per unit by 10%
Sales Price per unit	$                      560	$                           506	$                        460
Less:Variable Costs per unit	$                      200	$                           220	$                        200
Contribution margin per unit	$                      360	$                           286	$                        260
Contribution margin ratio	64.29%	56.52%	56.52%
Contribution Margin Income Statement
Units Produced and Sold	1000	1000	1000
Total Sales	$              5,60,000	$                   5,06,000	$                4,60,000
Less:Variable Costs	$              2,00,000	$                   2,20,000	$                2,00,000
Contribution margin	$              3,60,000	$                   2,86,000	$                2,60,000
Less:Fixed Costs	$                 99,000	$                      99,000	$                   79,200
Net Operating Income	$              2,61,000	$                   1,87,000	$                1,80,800