Question

Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0–1,600 units, and monthly production costs for the production of 1,200 units follow. Morning Dove’s utilities and maintenance costs are mixed with the fixed components shown in parentheses.  

Production Costs	Total Cost
Direct materials	$	2,700
Direct labor		7,300
Utilities ($120 fixed)		630
Supervisor’s salary		2,800
Maintenance ($280 fixed)		480
Depreciation		750

Suppose it sells each birdbath for $30.

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 1,400 units.

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.)

1.

			=	Unit Contribution Margin
					per Birdbath
			=	Contribution Margin Ratio
					%

2.

Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,400 units. (Round your intermediate calculation to 2 decimal places.)

MORNING DOVE COMPANY
Contribution Margin Income Statement
Expected for 1,400 Units
Contribution Margin
Net Operating Income

Answer 1