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The following costs result from the production and sale
Course:- Managerial Accounting
Reference No.:- EM13909233




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The following costs result from the production and sale of 12,000 CD sets manufactured by Gilmore Company for the year ended December 31, 2013. The CD sets sell for $ 18 each. The company has a 25% income tax rate.

Variable manufacturing costs: 

Plastic for CD sets . . . . . . . . . . . . . . . . . . . . . . $ 1,500
Wages of assembly workers . . . . . . . . . . . . . . . 30,000
Labeling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000
Variable selling costs Sales commissions . . . . . . . . . . . . . . . . . . . . . . . 6,000
Fixed manufacturing costs: Rent on factory . . . . . . . . . . . . . . . . . . . . . . . . . 6,750
Factory cleaning service . . . . . . . . . . . . . . . . . . 4,520
Factory machinery depreciation . . . . . . . . . . . . 20,000

Fixed selling and administrative costs: 

Lease of office equipment . . . . . . . . . . . . . . . . . 1,050
Systems staff salaries . . . . . . . . . . . . . . . . . . . . . 15,000
Administrative management salaries . . . . . . . . . 120,000

Required: 

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

2. Compute its contribution margin per unit and its contribution margin ratio. Analysis Component: 

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




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