Required information

E5-4 and E5-5 [LO 5-1, 5-5]

Skip to 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 01,800 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	$	2,900
Direct labor		7,300
Utilities ($140 fixed)		600
Supervisors salary		3,000
Maintenance ($350 fixed)		470
Depreciation		750

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

Suppose it sells each birdbath for $24.

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 1,700 units.

Calculate the unit contribution margin and contribution margin ratio for each birdbath sold. (Round Variable cost per unit to 2 decimal places. Round your contribution margin ratio to 2 decimal places. Enter all amounts as positive values.)

Sales price per unit	-	Variable Cost per Unit	=	Unit Contribution Margin
$24.00					per Birdbath
Unit Contribution Margin	/	Sales price per unit	=	Contribution Margin Ratio
					%

Complete the contribution margin income statement assuming that Morning Dove produces and sells 1,700 units. (Round your intermediate calculation to 2 decimal places.)

MORNING DOVE COMPANY
Contribution Margin Income Statement
Expected for 1,700 Units
Sales Revenue	$40,800
Contribution Margin
Net Operating Income