Question

Riverside Inc. makes one model of wooden canoe. Partial information for it follows: Number of Canoes Produced and Sold 500 650 800 Total costs Variable costs $ 67,500 ? ? Fixed costs 149,500 ? ? Total costs $217,000 ? ? 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 $508 each. Calculate the contribution margin per canoe and the contribution margin ratio. 4. Next year Riverside expects to sell 850 canoes. Complete the contribution margin income statement for the company.
Calculations would be greatly appreciated as well!

Answer 1

1) Table

	500	650	800
Total Cost
Variable cost	67500	87750	108000
Fixed cost	149500	149500	149500
Total Cost	217000	237250	257500
Cost per unit
Variable cost	135	135	135
Fixed cost	299	230	186.88
Total Cost per unit	434	365	321.88

b) Unit Contribution margin = 508-135 = 373

Contribution margin ratio = 373/508 = 73%

c) Contribution margin income statement

Sales (850*508)	431800
Variable cost (850*135)	114750
Contribution margin	317050
Fixed cost	149500
Operating income	167550