The following costs result from the production and sale of 12,000 CD sets manufactured by Gilmore Company for the year ended December 31, 2019. The CD sets sell for $18 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. Interpret the contribution margin and contribution margin ratio from part 2.

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Fixed manufacturing costs Rent on factory.... Factory cleaning service.. Factory machinery depreciation Fixed selling and administrative costs Lease of office equipment . Systems staff salaries.. Administrative management salaries.. Variable manufacturing costs Plastic for CD sets Wages of assembly workers Labeling.... Variable selling costs Sales commissions.. $ 6,750 $ 1,500 30,000 3,000 4,520 20,000 1,050 15,000 120,000 6,000