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E5-4 and E5-5 [LO 5-1, 5-5) Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sell
E. LUPICIL UL LUMUIDUL Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the
Suppose it sells each birdbath for $26. Required: 1. Calculate the unit contribution margin and contribution margin ratio for
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Answer #1
1
Sales price per unit - Variable cost per unit = Unit Contribution margin
26.00 7.11 18.89 per Birdbath
Unit Contribution margin / Sales price per unit = Contribution margin ratio
18.89 26.00 72.65%
2
Contribution Margin income statement
Sales revenue 46800 =1800*26
Variable costs 12798 =1800*7.11
Contribution margin 34002
Fixed costs 4080
Net operating income 29922
Workings:
Direct materials 1.94 =3100/1600
Direct labor 4.81 =7700/1600
Utilities 0.28 =(590-140)/1600
Maintenance 0.08 =(470-340)/1600
Variable cost per unit 7.11
Utilities 140
Supervisor's salary 2800
Maintenance 340
Depreciation 800
Total fixed costs 4080
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