roblem 21-1A Contribution margin income statement and contribution margin ratio LO A1

The following costs result from the production and sale of 4,400 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $290 each. The company has a 25% income tax rate.

Variable production costs
Plastic for casing	$	110,000
Wages of assembly workers		396,000
Drum stands		149,600
Variable selling costs
Sales commissions		101,200
Fixed manufacturing costs
Taxes on factory		14,000
Factory maintenance		28,000
Factory machinery depreciation		88,000
Fixed selling and administrative costs
Lease of equipment for sales staff		28,000
Accounting staff salaries		78,000
Administrative management salaries		158,000

Required:

1. Prepare a contribution margin income statement for the company. 2. Compute its contribution margin per unit and its contribution margin ratio.