Question

Calculating Contribution Margin and Contribution Ratio, Preparing Contribution Margin Income Statement [LO 5-5]Riverside Inc. makes one model of wooden canoe. Partial information for it follows:Number of Canoes Produced and Sold 400 600 750Total costsVariable costs $ 54,000 $ 81,000 $ 101,250Fixed costs 60,000 60,000 60,000Total costs $ 114,000 $ 141,000 $ 161,250Cost per unitVariable cost per unit $ 135.00 $ 135.00 $ 135.00Fixed cost per unit 150.00 100.00 80.00Total cost per unit $ 285.00 $ 235.00 $ 215.00Riverside sells its canoes for $370 each. Next year Riverside expects to sell 1,000 canoes.Required:Complete the Riverside’s contribution margin income statement for each independent scenario.

Answer 1

64% it's the contribution margin of the company.

Step-by-step explanation:

To find the contribution margin we need to find the gross profit which is the total sales minus the variable cost of goods, te contribution margin doesn't include the fixed costs only the variable ones.

Income Statement

Quantities 400 600 750 1.000

Sales $148,000 $222,000 $277,500 $370,000

Cost of goods sold -$54,000 -$81,000 -$101,250 -$135,000

Contribution Margin $94,000 $141,000 $176,250 $235,000

64% 64% 64% 64%

Fixed Cost -$60,000 -$60,000 -$60,000 -$60,000

Total Cost -$114,000 -$141,000 -$161,250 -$195,000

Operating Income $34,000 $81,000 $116,250 $175,000