Question
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
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 01,500 units, and monthly production costs for the production of 500 units follow. Morning Doves utilities and maintenance costs are mixed with the fixed components shown in parentheses. |
Production Costs | Total cost | |
Direct materials | $ | 1,500 |
Direct labor | 7,500 | |
Utilities ($100 fixed) | 650 | |
Supervisors salary | 3,000 | |
Maintenance ($280 fixed) | 480 | |
Depreciation | 800 | |
Suppose it sells each birdbath for $25. |
Required: | |
1. | Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. (Round your answers to 2 decimal places.) |
2. | Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,400 units. |
MORNING DOVE COMPANY | |
Contribution Margin Income Statement Expected for 1400 units ________ ______ ________ ______ ________ ______ ________ ______ Contribution Margin _____ _______ _______ _______ ________ _______ ________ Net Operating Income ________ | |
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