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Question - Calculating Contribution Margin

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Question - Calculating Contribution Margin and Contribution Margin Ratio, Preparing Contribution Margin Income Statement

Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0-1,800 units, and monthly production costs for the production of 1,400 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses.

Production Costs Total Cost

Direct materials $2,500

Direct labor 7,900

Utilities ($120 fixed) 610

Supervisor's salary 2,900

Maintenance ($310 fixed) 480

Depreciation 900

Suppose it sells each birdbath for $22.

Required -

1. Calculate the unit contribution margin and contribution margin ratio for each birdbath sold.

2. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,600 units.

Reference no: EM132569137

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