E53 Calculating Contribution Margin and Contribution Ratio, Preparing Contribution Margin Income Statement [LO 55]
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 0–2,500 units, and monthly production
costs for the production of 2,200 units follow. Morning Dove’s
utilities and maintenance costs are mixed with the fixed components
shown in parentheses.
Production Costs  Total Cost  
Direct materials  $  1,500 
Direct labor  6,700  
Utilities ($130 fixed)  620  
Supervisor’s salary  2,600  
Maintenance ($310 fixed)  520  
Depreciation  850  
Suppose it sells each birdbath for $22.
Required:
1. Calculate the unit contribution margin and contribution
margin ratio for each birdbath sold. (Round Variable cost
per unit to 2 decimal places. Enter all amounts as positive
values.)

2. Complete the contribution margin income
statement assuming that Morning Dove produces and sells 2,400
units. (Round your intermediate calculation to two decimal
place.)
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 2,400 units
Sales (2400*22)  52800 
Less: Variable cost (2400*4.05)  (9720) 
Contribution margin  43080 
Fixed expense  (3890) 
Net operating income  39190 
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