Question

Riverside Inc. makes one model of wooden canoe. Partial information for it follows: 600 800 950 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 $ 129,000 228,000 $ 357,000 $172,000 $204,250 228,000 228,000 $400,000 $432,250 $ 215.00 $ 215.00 $ 215.00 380.00 285.00 240.00 $ 595.00 $ 500.00 $ 455.00 Riverside sells its canoes for $670 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 (i.e. .1234 should be entered as 12.34%) and all other answers to the nearest dollar amount.) Scenario 1 Raises Sales Price to $770 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

Answer is given below

Scenario 1 Scenario 2 Scenario 3 Raise Sales price increase Sales price Decrease to $770 per and variable cost per Fixed Cost by 20 Canoe unit by 10 percent Percent $555.00 $500.50 $455.00 72.08% 67.91% 67.91% Unit Contribution Margin Contribution Margin Ratio Contribution Margin Income Statement Sales $770,000 $737,000 Variable Cost $215,000 $236,500 Contribution $555,000 $500,500 Less: Fixed Cost $228,000 $228,000 Net Operating Income $327,000 $272,500 $670,000 $215,000 $455,000 $182,400 $272,600 Scenario 3 fixed cost is $228,000*80% Working notes: Selling price Variable cost Contribution per unit Scenario 1 $770.00 $215.00 $555.00 Scenario 2 $737.00 $236.50 $500.50 Scenario 3 $670.00 $215.00 $455.00