Question

The last picture shows the dropdown menu for the 2nd requirement. The 4 options in the dropdown menu are the same for the whole left column.

Required information E5-4 and E5-5 [LO 5-1, 5-5) Morning Dove Company manufactures one model of birdbath, which is very popular, Morning Dove sells all units it produces each month. The relevant range is 0-1,700 units, and monthly production costs for the production of 1400 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($120 fixed) Supervisor's salary Maintenance ($280 fixed) Depreciation Total Cost $ 2,380 7,300 560 2,800 see 800 E5-5 (Algo) Calculating Contribution Margin and Contribution Margin Ratio, Preparing Contribution Margin Income Statement (LO 5-5) Suppose It sells each brdbath for $26. Required: 1. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold 2. Complete the contribution margin income statement assuming that Moming Dove produces and sells 1600 units.

Answer 1

Ans 1 Fixed Cost Variable Cost $2,300 $7,300 $440 Particulars Direct Material Direct Labor Utilities Supervisor's Salary Maintenance Depreciation Total Variable Cost per unit [$10260/14000] $220 $120 $2,800 $280 $800 $4,000 $10,260 $7.33 Sales Price per unit - Variable Cost per unit = Unit Contribution Margin $26.00 - $7.33 = | $18.67 per birdbath Unit Contribution Margin / Sales Price per unit = Contribution Margin Ratio $18.67 / $26.00 = 71.81% Ans 2 Morning Dove Company Contribution Margin Income Statement Expected for 1600 Units Sales $41,600 [$26 x 1600] Less: Variable Cost $11,728 [$7.33 x 1600] Contribution Margin $29,872 Less: Fixed Cost $4,000 Net Operating Income $25,872