Question

Saved Help E5-19 (Algo) Calculating Contribution Margin and Contribution Ratio, Preparing Contribution Margin Income Statement [LO 5-5) 750 Riverside Inc, makes one model of wooden canoe. Partial information for it follows: Number of Canoes Produced and sold 550 900 Total costs Variable costs $115,500 $157,500 $189,000 Fixed costs 198,000 199,000 198,000 Total costs $313,500 $355,500 $387,000 Cost per unit Variable cost per unit $ 210.00 $ 210.00 $ 210.00 Fixed cost per unit 360.00 264.00 220.00 Total cost per unit $ 570.00 $ 474.00 $ 430.00 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 doltar amount.) Scenario 1 Raises Sales Price to $750 Der Canon Scenario 2 Increase Sales Price and Variable Cost per Scenario 3 Decrease Fixed Cost by 20 Percent Prey 1 of 1 !!! Next

Answer 1

Solution

	Scenario 1-Raises sales Price to $750 per canoe	Scenario 2 Increase sales price and variable cost per unit by 10%	Scenario 3-Derease Fixed cost by 20%
Unit Contribution Margin	$               540.00	$              484.00	$             440.00
Contribution Margin ratio	72.00%	67.69%	67.69%
Contribution Margin Income Statement
Sales	$       750,000.00	$      715,000.00	$    650,000.00
Less: Variable Cost	$       210,000.00	$      231,000.00	$    210,000.00
Contribution Margin	$       540,000.00	$      484,000.00	$    440,000.00
Less: Fixed Cost	$       198,000.00	$      198,000.00	$    158,400.00
Net Operating Income	$       342,000.00	$      286,000.00	$    281,600.00