Question

Morning uove company manufactures one model OT dirapatn, which is very popular, Morning uove seis an units it produces each month. The relevant range is 0-1,800 units, and monthly production costs for the production of 1,400 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($140 fixed) Supervisor's salary Maintenance ($340 fixed) Depreciation Total Cost $2,900 6,500 570 2,500 450 700 E5-5 (Algo) Calculating Contribution Margin and Contribution Margin Ratio, Preparing Contribution Margin Income Statement [LO 5-5) Suppose It sells each birdbath for $28. Required: 1. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. 2. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,600 units. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. (Round Variable cost per unit to 2 decimal places. Round your contribution margin ratio to 2 decimal places. Enter all amounts as positive values.) = Unit Contribution Margin per Birdbath < Prev 3 of 4 Next >

Answer 1

solution: Part 1: unit Sale price = uni unit Variable cost** 7.10 28.00 - = unit contribution margin 20.90 per birdbath unit contribution margin unit Sale price 28.00 contribution margin ratio = | 74.64% 20.901 Part 2: MORNING DOVE COMPANY Contribution margin Income statement | Expected for 1600 units Sales Revenue (1600*28) Less : Variable expense (1600*7.10) Contribution margin Less : Fixed expense** Net operating income 44,800 11,360 33,440 3,680 29,760 Fixed cost Variable cost 2,900 6,500 430 **working: Direct material Direct labor Utilites supervisor's salary Maintenance Depreciation Total 140 2,500 110 340 700 3,680 9,940 unit Variable cost=9940/1400 7.10