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The following costs result from the production and sale of 4,650 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019.

The following costs result from the production and sale of 4,650 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $315 each. The company has a 30% income tax rate.

Variable production costs
Plastic for casing $ 139,500
Wages of assembly workers 441,750
Drum stands 181,350
Variable selling costs
Sales commissions 130,200
Fixed manufacturing costs
Taxes on factory 8,500
Factory maintenance 17,000
Factory machinery depreciation 77,000
Fixed selling and administrative costs
Lease of equipment for sales staff 17,000
Accounting staff salaries 67,000
Administrative management salaries 147,000

Required: 1. Prepare a contribution margin income statement for the year. 2. Compute its contribution margin per unit and its contribution margin ratio. 3. For each dollar of sales, how much is left to cover fixed costs and contribute to operating income?

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