Question

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

Number of Canoes Produced and Sold
		550		700		850
Total costs
Variable costs	$	73,150		?		?
Fixed costs		149,700		?		?
Total costs	$	222,850		?		?
Cost per unit
Variable cost per unit		?		?		?
Fixed cost per unit		?		?		?
Total cost per unit		?		?		?

Required:
1. Complete the table. (Round your cost per unit answers to 2 decimal places.)   



3. Suppose Riverside sells its canoes for $507 each. Calculate the contribution margin per canoe and the contribution margin ratio. (Round your contribution margin to the nearest whole dollar and your contribution margin ratio to the nearest whole percent.)


4. Next year Riverside expects to sell 900 canoes. Complete the contribution margin income statement for the company.

Answer 1

Variable cost per unit	133	=73150/550
1
Number of Canoes Produced and Sold	550	700	850
Total costs
Variable costs	73150	93100	113050
Fixed costs	149700	149700	149700
Total costs	222850	242800	262750
Cost per unit
Variable cost per unit	133.00	133.00	133.00
Fixed cost per unit	272.18	213.86	176.12
Total cost per unit	405.18	346.86	309.12
3
Unit Contribution margin	374	=507-133
Contribution margin ratio	74%	=374/507
4
Contribution margin income statement
Sales revenue	456300	=900*507
Variable costs	119700	=900*133
Contribution margin	336600
Fixed costs	149700
Net Operating income	186900