Question

Riverside Inc. makes one model of wooden canoe. Partial information for it follows: 450 650 900 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 $ 69,750 234,000 $303,750 $ 100,750 234,000 $ 334,750 $139,500 234,000 $373,500 $ 155.00 520.00 $ 675.00 $ 155.00 360.00 $ 515.00 $ 155.00 260.00 $ 415.00 Riverside sells its canoes for $750 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 is complete but not entirely correct. Scenario 2 Increase Sales Scenario 3 Scenario 1 Raises < Prev 4 of 4 11 Next

Answer 1

Sale price per unit	850	825	750
Variable cost per unit	155	170.5	155
	Scenario 1 Raises sales price to $850 per canoe	Scenario 2 Increases sales price and variable cost per unit by 10%	Scenario 3 decrease fixed cost by 20%
Unit contribution margin	695.00	654.50	595.00
Contribution margin ratio	81.76%	79.33%	79.33%
Contribution Margin Income statement
Sales revenue	$        850,000	$        825,000	$        750,000
Variable costs	$        155,000	$        170,500	$        155,000
Contribution margin	$        695,000	$        654,500	$        595,000
Fixed costs	$        234,000	$        234,000	$        187,200
Net operating income	$        461,000	$        420,500	$        407,800

Excel formula view:

G H J 4 Variable cost per unit 155 =155*1.1 155 Scenario 1 Raises sales price to $850 per canoe Scenario 2 Increases sales price and variable cost per Scenario 3 decrease fixed unit by 10% cost by 20% 5 6 Unit contribution margin =+H3-H4 =+13-14 =+J3-14 =+36/13 =+J3*1000 =+J4*1000 7 Contribution margin ratio =+H6/13 =+16/13 8 9 Contribution Margin Income statement 10 Sales revenue =+H3*1000 =+13*1000 11 Variable costs =+H4*1000 =+14*1000 12 13 14 Contribution margin =+H10-H11 =+110-111 15 Fixed costs 234000 234000 16 17 18 Net operating income =+H14-H15 =+114-115 =+J10-J11 =+115*0.8 =+J14-115