Problem 21-1A Contribution margin income statement and contribution margin ratio LO A1

The following costs result from the production and sale of 4,700 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $320 each. The company has a 35% income tax rate.

Variable production costs
Plastic for casing	$	145,700
Wages of assembly workers		451,200
Drum stands		188,000
Variable selling costs
Sales commissions		136,300
Fixed manufacturing costs
Taxes on factory		8,000
Factory maintenance		16,000
Factory machinery depreciation		76,000
Fixed selling and administrative costs
Lease of equipment for sales staff		16,000
Accounting staff salaries		66,000
Administrative management salaries		146,000

Required:

1. Prepare a contribution margin income statement for the company. 2. Compute its contribution margin per unit and its contribution margin ratio.

TIGHT DRUMS COMPANY Contribution Margin Income Statement For Year Ended December 31, 2017 Sales Variable costs: Total variable costs Contribution margin Fixed costs Total fixed costs TIGHT DRUMS COMPANY Contribution Margin Income Statement (partial) For Year Ended December 31, 2017 Per Unit Sales Variable costs: Total variable costs Contribution margin