The following costs result from the production and sale of 4,000 drum sets manufactured by Vince Drum Company for the year ended December 31, 2011. The drum sets sell for $250 each. The company has a 25% income tax rate

Required
1. Prepare a contribution margin income statement for the company.
2. Compute its contribution margin per unit and its contribution margin ratio.
Analysis Component
3. Interpret the contribution margin and contribution margin ratio from part2.

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Variable production costs Plastic for casing.... 68,000 104,000 60,000 Drum stands A Variable selling costs Sales commissions. Fixed manufacturing costs Factory maintenance Factory machinery depreciation.. 10,000 20,000 80,000 Fixed selling and administrative costs Lease of equipment for sales staff. Accounting staff salaries Administrative management salares . .. 20.000 70,000 150,000