Question

iverside Inc. makes one model of wooden canoe. Partial information for it follows:

Number of Canoes Produced and Sold
		510		660		810
Total costs
Variable costs	$	70,380		?		?
Fixed costs		149,300		?		?
Total costs	$	219,680		?		?
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 $520 each. Calculate the contribution margin per canoe and the contribution margin ratio.

4. Next year Riverside expects to sell 860 canoes. Complete the contribution margin income statement for the company.

Required 1 Required 3 Required 4 Complete the table. (Round your cost per unit answers to 2 decimal places.) 510 660 810 $ 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 70,380 149,300 219,880 $ $ 0 $ $ 0.00 $ 0.00 $ 0.00 Required 1 Required 3 Required 4 Suppose Riverside sells its canoes for $520 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your contribution margin to the nearest whole dollar and your contribution margin ratio to the nearest whole percent.) per canoe Unit Contribution Margin Contribution Margin Ratio Required 1 Required 3 Required 4 Next year Riverside expects to sell 860 canoes. Complete the contribution margin income statement for the company. (Round your Contribution margin to 2 decimal places.) RIVER SIDE INC. Contribution Margin Income Statement For the Next Year Contribution Margin Net Operating Income Required 3 Required 4 >

Answer 1

Solution 1:

Number of Canoes Produced and Sold	510	660	810
Total costs:
Variable Costs	$70,380	$91,080	$1,11,780
Fixed Costs	$1,49,300	$1,49,300	$1,49,300
Total costs	$2,19,680	$2,40,380	$2,61,080
Cost per unit:
Variable cost per unit	$138.00	$138.00	$138.00
Fixed cost per unit	$292.75	$226.21	$184.32
Total cost per unit	$430.75	$364.21	$322.32

Solution 3:

Contribution margin = $520 - 138 = $382

Contribution margin ratio = $382 / $520 = 73%

Solution 4:

Contribution margin income Statement
Particulars	Amount
Sales (860*$520)	$4,47,200.00
Variable costs (860*$138)	$1,18,680.00
Contribution margin	$3,28,520.00
Fixed costs	-$1,49,300.00
Net operating income	$4,77,820.00