The following costs result from the production and sale of 4,950 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $345 each. The company has a 40% income tax rate.

Variable production costs
Plastic for casing	$	178,200
Wages of assembly workers		499,950
Drum stands		222,750
Variable selling costs
Sales commissions		168,300
Fixed manufacturing costs
Taxes on factory		5,500
Factory maintenance		11,000
Factory machinery depreciation		71,000
Fixed selling and administrative costs
Lease of equipment for sales staff		11,000
Accounting staff salaries		61,000
Administrative management salaries		141,000

Required:

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

Complete this question by entering your answers in the tabs below.

• Required 1

• Required 2

Prepare a contribution margin income statement for the company.

TIGHT DRUMS COMPANY
Contribution Margin Income Statement
For Year Ended December 31, 2017
Sales
Variable costs:
Total variable costs
Contribution margin
Fixed costs
Total fixed costs

• Required 1