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

The following costs result from the production and sale of 4,150 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $265 each. The company has a 40% income tax rate.

Variable production costs
Plastic for casing	$	83,000
Wages of assembly workers		352,750
Drum stands		120,350
Variable selling costs
Sales commissions		74,700
Fixed manufacturing costs
Taxes on factory		11,500
Factory maintenance		23,000
Factory machinery depreciation		83,000
Fixed selling and administrative costs
Lease of equipment for sales staff		23,000
Accounting staff salaries		73,000
Administrative management salaries		153,000

Required:

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

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

Required 1

Required 2

Compute its contribution margin per unit and its contribution margin ratio. (Round Contribution margin ratio to nearest whole percentage.)

TIGHT DRUMS COMPANY
Contribution Margin Income Statement (partial)
For Year Ended December 31, 2017
		Per Unit
Sales
Variable costs:
Drum stands
Plastic for casing
Plastic for casing
Plastic for casing
Total variable costs
Contribution margin

Required 1

Required 2