Question

Riverside Inc. makes one model of wooden canoe. Partial information for it follows:

Number of Canoes Produced and Sold		400			600			750
Total costs
Variable costs	$	48,000		$	72,000		$	90,000
Fixed costs		120,000			120,000			120,000
Total costs	$	168,000		$	192,000		$	210,000
Cost per unit
Variable cost per unit	$	120.00		$	120.00		$	120.00
Fixed cost per unit		300.00			200.00			160.00
Total cost per unit	$	420.00		$	320.00		$	280.00

Riverside sells its canoes for $500 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.)

Riverside Inc. makes one model of wooden canoe. Partial information for it follows:

Number of Canoes Produced and Sold		400			600			750
Total costs
Variable costs	$	48,000		$	72,000		$	90,000
Fixed costs		120,000			120,000			120,000
Total costs	$	168,000		$	192,000		$	210,000
Cost per unit
Variable cost per unit	$	120.00		$	120.00		$	120.00
Fixed cost per unit		300.00			200.00			160.00
Total cost per unit	$	420.00		$	320.00		$	280.00

Riverside sells its canoes for $500 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 1

Solution:

Number of Canoes Produced and Sold	400	600	750
Total costs:
Variable Costs	$48,000.00	$72,000.00	$90,000.00
Fixed Costs	$120,000.00	$120,000.00	$120,000.00
Total costs	$168,000.00	$192,000.00	$210,000.00
Cost per unit:
Variable cost per unit	$120.00	$120.00	$120.00
Fixed cost per unit	$300.00	$200.00	$160.00
Total cost per unit	$420.00	$320.00	$280.00

Contribution margin income Statement
Particulars	Amount
Sales (1000*$500)	$500,000.00
Variable costs (1000*$120)	$120,000.00
Contribution margin	$380,000.00
Fixed costs	$120,000.00
Net operating income	$260,000.00