Reference no: EM13599739

The following costs result from the production and sale of 4,000 drum sets manufactured by Vince Drum Company for the year ended December 31, 2011. The drum sets sell for $250 each. The company has a 25% income tax rate. Variable production costs Plastic for casing............................................$68,000 Wages of assembly workers...............................328,000 Drum stands.................................................104,000 Variable sellings costs Sales commissions...........................................60,000 Fixed manufacturing costs Taxes on factory.............................................10,000 Factory maintenance.........................................20,000 Factory machinery depreciation . 80,000. Fixed selling administrative costs Lease of equipment for sales staff........................ 20,000 Accounting staff salaries.....................................70,000 Administrative management salaries......................150,000

Required 1. Prepare a contribution margin income statement for the company

2. Compute its contribution margin and contribution margin ratio. 3. Interpret the contribution margin ratio from part 2.