Question

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

Number of Canoes Produced and Sold		550			750			900
Total costs
Variable costs	$	107,250		$	146,250		$	175,500
Fixed costs		247,500			247,500			247,500
Total costs	$	354,750		$	393,750		$	423,000
Cost per unit
Variable cost per unit	$	195.00		$	195.00		$	195.00
Fixed cost per unit		450.00			330.00			275.00
Total cost per unit	$	645.00		$	525.00		$	470.00

Riverside sells its canoes for $750 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 two decimal places (i.e. .1234 should be entered as 12.34%) and all other answers to the nearest dollar amount.)

Answer 1

RIVERSIDE INC.
Number of Canoes Produced and Sold	550		750		900		1000
Sales	$412,500		$562,500		$675,000		$750,000
Less: Variable costs	$107,250		$146,250		$175,500		$195,000
Contribution margin	$305,250		$416,250		$499,500		$555,000
Contribution margin per unit	555.00		555.00		555.00		555.00
Contribution Margin Ratio	74.00%		74.00%		74.00%		74.00%
(Contribution margin / Sales)