Reference no: EM131755940
Account Analysis and Contribution Margin Income Statement. Downhill Company would like to estimate costs associated with its production of bike helmets on a monthly basis. The accounting records indicate the following production costs were incurred last month for 4,000 helmets.
Assembly workers' labor (hourly) $70,000
Factory rent 3,000
Plant manager's salary 5,000
Supplies 20,000
Factory insurance 12,000
Materials required for production 20,000
Maintenance of production equipment (based on usage) 18,000
Required:
A. Use account analysis to estimate total fixed costs per month and the variable cost per unit. State your results in the cost equation form Y = f + vX by filling in the dollar amounts for f and v.
B. Estimate total production costs assuming 5,000 helmets will be produced and sold.
C. Prepare a contribution margin income statement assuming 5,000 helmets will be produced, and each helmet will be sold for $70. Fixed selling and administrative costs total $10,000. Variable selling and administrative costs are $8 per unit.
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