Problem 18-2A (Algo) Contribution margin income statement and contribution margin ratio LO A1

The following costs result from the production and sale of 4,800 drum sets manufactured by Tight Drums Company for the year ended December 31. The drum sets sell for $330 each.

Variable costs
Plastic for casing	$ 158,400
Wages of assembly workers	470,400
Drum stands	201,600
Sales commissions	148,800
Fixed costs
Taxes on factory	7,000
Factory maintenance	14,000
Factory machinery depreciation	74,000
Lease of equipment for sales staff	14,000
Accounting staff salaries	64,000
Administrative salaries	144,000

Required: 1. Prepare a contribution margin income statement for the year. 2. Compute contribution margin per unit and contribution margin ratio. 3. For each dollar of sales, how much is left to cover fixed costs and contribute to income?

Complete this question by entering your answers in the tabs below.

Required 1

Required 2

Required 3

Prepare a contribution margin income statement for the year.

TIGHT DRUMS COMPANY
Contribution Margin Income Statement
For Year Ended December 31
Sales
Variable costs:
Contribution margin
Fixed costs
Income