Question

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

Number of Canoes Produced and Sold		500			700			850
Total costs
Variable costs	$	87,500		$	122,500		$	148,750
Fixed costs		178,500			178,500			178,500
Total costs	$	266,000		$	301,000		$	327,250
Cost per unit
Variable cost per unit	$	175.00		$	175.00		$	175.00
Fixed cost per unit		357.00			255.00			210.00
Total cost per unit	$	532.00		$	430.00		$	385.00

Riverside sells its canoes for $650 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.)

Answer 1

Number of canoes produced & sold	500	700	850	1000
sales @ 650	325000	455000	552500	650000
less: variable cost @175	87500	122500	148750	175000
Contribution margin	237500	332500	403750	475000
less: fixed cost	178500	178500	178500	178500
net operating income	59000	154000	225250	296500