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 to 1,900 units, and monthly production costs for the production of 1,500 units follow. Morning Doves utilities and maintenance costs are mixed with the fixed components shown in parentheses.

Production Costs	Total Cost
Direct materials	$ 2,100
Direct labor	7,900
Utilities ($130 fixed)	620
Supervisors salary	2,600
Maintenance ($310 fixed)	460
Depreciation	850

E5-5 (Algo) Calculating Contribution Margin and Contribution Margin Ratio, Preparing Contribution Margin Income Statement [LO 5-5]

Suppose it sells each birdbath for $22.

Required:

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

			=	Unit Contribution Margin
			=		per Birdbath
			=	Contribution Margin Ratio
			=		%

2. Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,700 units.

Morning Dove Company
Contribution Margin Income Statement
Expected for 1,700 Units
Contribution margin
Net operating income