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The following costs result from the production and sale of 12,000 LEGO sets manufactured by LEGO Problem 21-28 Company for the year ended December 31.

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The following costs result from the production and sale of 12,000 LEGO sets manufactured by LEGO Problem 21-28 Company for the year ended December 31. The LEGO sets sell for $20 each. Contribution margin income statement and contribution margin ratio Variable costs Fixed costs Plastic for LEGO sets A1 $ 3,000 Rent on factory $ 6,750 Wages of assembly workers 30,000 Factory cleaning service, 4,520 Labeling 3,000 Factory machinery depreciation 20.000 Sales commissions 6,000 Lease of office equipment 1.050 Office staff salaries 15.000 Administrative salaries 120,000 Required 1. Prepare a contribution margin income statement for the year. 2. Compute contribution margin per unit and contribution margin ratio. Analysis Component 3. For each dollar of sales, how much is left to cover fixed costs and contribute to income? Rivera Co, sold 20,000 units of its only product and reported income of $20,000 for the current year. Problem 21-38 During a planning session for next year's activities, the production manager notes that variable costs can Break-even analysis be reduced 25% by installing a machine that automates several operations. To obtain these savings, the income targeting and company must increase its annual fixed costs by $113,000. The selling price will not change. strategy C2 A1 P2 Contribution Morpin Income Statement For Year Ended December 31 Sales (20,000 X 537.50 per unit) Variable costs (20,000 x $30 per unit) Contribution margin Fed costs Income $750,000 600.000 150,000 130.000 $ 20,000 Required 1. Compute the break-even point in dollar sales for next year assuming the machine is installed. 2. Prepare a contribution margin income statement for next year that shows the expected results with the machine installed. Assume sales are $750,000. 3. Compute the sales level required in both dollars and units to earn $87,000 of target income for next year with the machine installed. Check income. 557 000 Stam Co produces and sells two products, BB and TT. It manufactures these products in separate factories Problem 21-48

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