The following costs result from the production and sale of 4,400 drum sets manufactured by Tight...

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The following costs result from the production and sale of 4,400 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $290 each. The company has a 25% income tax rate. Variable production costs Plastic for casing Wages of assembly workers Drum stands $110,000 396,000 149,600 Variable selling costs Sales commissions 101, 200 Fixed manufacturing costs Taxes on factory 14,000 Factory maintenance 28,000 88,000 Factory machinery depreciation Fixed selling and administrative costs Lease of equipment for sales staff 28,000 78,000 Accounting staff salaries Administrative management salaries 158,000 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? TIGHT DRUMS COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 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, 2019 Per Unit Sales Variable costs: Total variable costs Contribution margin For each dollar of sales, how much is left to cover fixed costs and contribute to operating income? The following costs result from the production and sale of 4,400 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $290 each. The company has a 25% income tax rate. Variable production costs Plastic for casing Wages of assembly workers Drum stands $110,000 396,000 149,600 Variable selling costs Sales commissions 101, 200 Fixed manufacturing costs Taxes on factory 14,000 Factory maintenance 28,000 88,000 Factory machinery depreciation Fixed selling and administrative costs Lease of equipment for sales staff 28,000 78,000 Accounting staff salaries Administrative management salaries 158,000 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? TIGHT DRUMS COMPANY Contribution Margin Income Statement For Year Ended December 31, 2019 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, 2019 Per Unit Sales Variable costs: Total variable costs Contribution margin For each dollar of sales, how much is left to cover fixed costs and contribute to operating income?

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ANSWER Solution 1 Sales 4400 290 Variable costs Plastic for c... View the full answer