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Required information E5-4 and E5-5 [LO 5-1, 5-5] Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells...
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Required information
E5-4 and E5-5 [LO 5-1, 5-5]
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 0-1,800 units, and monthly production costs for the
production of 1,400 units follow. Morning Dove's utilities and
maintenance costs are mixed with the fixed components shown in
parentheses.
Production
Costs
Total Cost
Direct
materials
$ 2, 500
Direct labor
7,900
Utilities
($120 fixed)
610
Supervisor's
salary
2, 900
Maintenance
($310 fixed)
480
Depreciation
900
E5-5 (Algo) Calculating Contribution Margin and Contribution Margin Ratio,
Preparing Contribution Margin Income Statement [LO 5-5]
Suppose it sells each birdbath for $22.
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 1,600 units.
MORNING DUVE
COMPANY
Contribution Margin
Income Statement
Expected for 1,600
Units
Sales
$
Revenue
35,200
Variable Costs
Variable Costs
Variable Costs
Contribution
Margin
Fixed Costs
$ 3,800
Fixed Costs
Fixed Costs
Net Operating
Income
< Required
Required 2 >

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