Answer:
Contribution margin income statement for the year ended December 31, 2015.
Sales (5,000 drum sets × $350) 1,750,000
Less Variable Costs :
Variable production costs :
Plastic for casing 185,000
Wages of assembly workers 510,000
Drum stands 230,000
Variable selling costs :
Sales commissions 175,000 (1,100,000)
Contribution 650,000
Less Fixed Cost :
Fixed manufacturing costs :
Taxes on factory 5,000
Factory maintenance 10,000
Factory machinery depreciation 70,000
Fixed selling and administrative costs :
Lease of equipment for sales staff 10,000
Accounting staff salaries 60,000
Administrative management salaries 140,000 (295,000)
Net Income before tax 355,000
Income tax expense (88,750)
Income after tax 266,250
Explanation:
A contribution margin income statement shows the contribution amounts and the net income after removing all fixed expenses from contribution.
