Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units
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 0–1,700 units, and monthly production costs for the production of 1,400 units follow. Morning Dove’s utilities and maintenance costs are mixed with the fixed components shown in parentheses.
Production Costs | Total Cost | |
Direct materials | $ | 1,700 |
Direct labor | 7,900 | |
Utilities ($120 fixed) | 640 | |
Supervisor’s salary | 3,300 | |
Maintenance ($290 fixed) | 530 | |
Depreciation | 750 | |
Suppose it sells each birdbath for $28.
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 1,600 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.)
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Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,600 units. (Round your intermediate calculation to 2 decimal places.)
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Managerial Accounting
ISBN: 978-0078025518
2nd edition
Authors: Stacey Whitecotton, Robert Libby, Fred Phillips