The following costs result from the production and sale of 1,000 drum sets manufactured by Tight Drums
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The following costs result from the production and sale of 1,000 drum sets manufactured by Tight Drums Company forthe year ended December 31, 2019. The drum sets sell for $500 each. The company has a 25% income tax rate.
Required
1. Prepare a contribution margin income statement for the year.
2. Compute its contribution margin per unit and its contribution margin ratio.
3. For each dollar of sales, how much is left to cover fixed costs and contribute to operating income?
Contribution MarginContribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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