The following costs result from the production and sale of 5,000 drum sets manufactured by...
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Accounting
The following costs result from the production and sale of 5,000 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $350 each. The company has a 25% income tax rate.
Variable production costs
Plastic for casing
$
185,000
Wages of assembly workers
510,000
Drum stands
230,000
Variable selling costs
Sales commissions
175,000
Fixed manufacturing costs
Taxes on factory
5,000
Factory maintenance
10,000
Factory machinery depreciation
70,000
Fixed selling and administrative costs
Lease of equipment for sales staff
10,000
Accounting staff salaries
60,000
Administrative management salaries
140,000
Required:
1. Prepare a contribution margin income statement for the company. 2. Compute its contribution margin per unit and its contribution margin ratio.
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