Question

E5-14 Determining Cost Behavior, Preparing Contribution Margin Income Statement [LO 5-1, 5-5] Riverside Inc. makes one model of wooden canoe. Partial information for it follows: Number of Canoes Produced and Sold 540 690 840 ? $ 78,840 149,600 $228.440 Total costs Variable costs Fixed costs Total costs 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.) 540 6 90 8 40 $ Number of Canoes Produced and Sold Total Costs Variable Costs Fixed Costs Total Costs Cost per Unit Variable Cost per Unit Fixed Cost per Unit Total Cost per Unit 78,840 149,600 228,440 $

Answer 1

1.) Table :-

Number of Canoes produced and sold	540	690	840
Total costs
Variable cost	78,840	146 x 690 = 100,740	146 x 840 = 122,640
Fixed cost	149,600	149,600	149,600
Total cost	228,440	250,340	272,240
Cost per unit
Variable cost per unit	146	146	146
Fixed cost per unit	149,600/540 = 277.04	149,600/690 = 216.81	149,600/840 = 178.10
Total cost per unit	423.04	362.81	324.10

Variable cost per unit = 78,840/540 = 146

3.) Unit contribution margin = Sales - Variable cost

= 509 - 146 = $363

Contribution margin ratio = (Sales - vc)/sales

= (509 - 146)/509 = 71.32% or 71%

4.) Contribution margin income statement :-

RIVERSIDE INC.

Contribution margin Income Statement

For the next year

Revenue (890 x 509)	453,010
Less: Variable cost (890 x 146)	(129,940)
Contribution margin	323,070
Less: Fixed cost	(149,600)
Net operating income	173,470