Question

Riverside Inc. makes one model of wooden cance. Partial information for it follows 5DOD850 Number ot Canoes Produced and Sold Total cosls Variable costs Fixed costs S 82,500 115,500 S140,250 178,500 178 500 178,500 Tctal costs 261,000 294.000 S318,750 Cost per unit Variable cost per unit Fixed cost per unit S 165.00 S 165.C0 S 165.00 210.00 S 52200 420.00 S 375.00 357.00 255.00 Tetal cost per unit Riverside sells its canoes for $600 each. Next year Riverside expects to sell 1,000 canoes Required: Com p ete he Riverside's contribution margin n me s tement or each indepen ent scenar o ssum ng each scenano is日vanation o places (i.e. .1234 should be entered as 12.34%) and all other answers to the nearest dollar amount.) R erside's ong na dat日 ound your unit contribution mar in and contribution margin ratio o two decimal Scenario 1 Ralses Sales Price to $700 per Canoe Scenario 2 Increase Sales Price and Variable Cost per Unit by 10 Percent Scenario 3 Decrease Fixed Cost by 20 Percent Unil Contribulion Margi Contribution Margin Ratio Centribution Margin Net Operating Income

Answer 1

			Scenario 1	Scenario 2	Scenario 3
Selling price per unit			700	660	600
			(Given)	(600+10%)
Less: Variable cost per unit			165	181.5	165
Contribution margin per unit			535	478.5	435
(Selling price - Variable cost per unit)
Unit contribution margin			535	478.5	435
Cm ratio			76.43%	72.50%	72.50%
(CM per unit / Selling price)
Contribution Margin Income Statement
Sales revenue			700000	660000	600000
(Sales units i.e. 1000 * Selling price)
Less: Variable cost			165000	181500	165000
(Sales units i.e. 1000 * VC per unit)
Total contribution			535000	478500	435000
Less: Fixed cost			178500	178500	178500
Net Operating income			356500	300000	256500