Question

The following costs result from the production and sale of 1000 drum sets manufactured by Tight Drums Company for the year ended December 31 2019. The drum sets sell for $500 each. The company has a 25% income tax rate $ 17,000 82,000 26,000 15,000 Variable production coats Plastic for casing Uages of assebly workers DE stands Variable selling costs Sale commissions Fixed manufacturing costs Taxes on factory Factory maintenance Factory machinery depreciation Fixed selling and administrative costs Lease of equipment for sales start Nccounting start salaries Administrative management sale 5,000 10,000 10,000 10,000 35,000 125,000

Answer 1

) Contribution margin in come statement for the years plastic fox Casting Contribution margin Particulars $ Sales (1000 x $ 500) $ 500,000 less. variable costs Production costs ($17,000) Wages of assembly workers (82,000) Drum stands (26,000) Selling comis Sales commissions (15,000) $ (140,000) $_360,000 ress fixed costs Manufacturing words Taxes on factory C5,000) factory maintainance (10,000) Factory machineq deprecatron (40,000) Selling & admin costs lease of equipment for sales staff_(10,000) (35,000) Admin management salaries (125,000) $225,000 Net income before tax $135,000 less - Income tax @ 256 $ (33,750) Net income after tax $10], 256 Accounting staff salaries 1

2) Variable cost per unito Variable cost No. of units = $.140,000 1,000 = $140_pey unil Therefore, contribution margin_per unit $ $500 - $140 $ 360 contribution per unit contribution margin ratio 3 100 X sale price per unit $_360 X 100 $500 72-4 3)_for each dollar of sales,_$0.723.2( $1 x 72%) is left to cover fixed costs and contribute to operating income Please feel free to ask any query and do solution was Satisfactory -_Thank you, give a thumbs up if the