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Part Two Contribution Margin Albert and Alice Johnson set up a company called Heavenly Music Incorporated. They provide music CDs around the Washington, D.C. area
Part Two Contribution Margin Albert and Alice Johnson set up a company called Heavenly Music Incorporated. They provide music CDs around the Washington, D.C. area for various musical artist and aspiring musical artists. The company sold 12,000CDs and they sell for $18 each for the year ended December 31. The tax rate is 21%. Variable production costs Plastic for casing $1,500 Wage of assembly workers $30,000 Labeling - $3,000 Selling and Administrative- $6,000 Fixed manufacturing costs Rent on Factory - $6,750 Factory maintenance - $4,520 Factory machine depreciation - $20,000 Fixed selling and administrative costs Lease of equipment - $1,050 Accounting staff salaries - $15,000 Administrative management salaries - $120,000 Required: Please complete the following: 1. Compute the contribution margin. 2. Compute the contribution margin ratio. 3. Compute the break-even in sales units. 4. Compute the break-even in sales dollars. 5. Compute the margin of safety in units. 6. Prepare a contribution income statement for the year end. 7. Compute the unit sales required for a monthly after-tax profit of $50,000
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