The following costs result from the production and sale of 1,000 drum sets manufactured by Tight Drums Company for the year ended December 31, 2017. The drum sets sell for $500 each. The company has a 25$

$$\begin{matrix} \text{Variable production costs} & \quad & \text{Fixed manufacturing costs}\\ \text{Plastic for casing}\ldots\ldots\ldots & \text{\$ 17,000} & \text{Taxes on factory} \ldots\ldots\ldots & \text{\$ 5,000}\\ \text{Wages of assembly workers} \ldots\ldots\ldots & \text{82,000} & \text{Factory maintenance}\ldots\ldots\ldots & \text{10,000}\\ \text{Drum stands} \ldots\ldots\ldots & \text{26,000} & \text{Factory machinery depreciation}\ldots\ldots\ldots & \text{40,000}\\ \text{Variable selling costs} & \quad & \text{Fixed selling and administrative costs}\\ \text{Sales commissions} \ldots\ldots\ldots & \text{15,000} & \text{Lease of equipment for sales staff} \ldots\ldots\ldots & \text{10,000}\\ \quad & \quad & \text{Accounting staff salaries}\ldots\ldots\ldots & \text{35,000}\\ \quad & \quad & \text{Administrative management salaries} \ldots\ldots\ldots & \text{125,000}\\ \end{matrix}$$

$ 1. Prepare a contribution margin income statement for the company. 2. Compute its contribution margin per unit and its contribution margin ratio. 3. Interpret the contribution margin and contribution margin ratio from part 2.

Shannon Company segments its income statement into its North and South Divisions. The company's overall sales, contribution margin ratio, and net operating income are $500.000, 46%, and$10.000, respectively. The North Division's contribution margin and contribution margin ratio are $150.000 and 50% respectively. The South Division's segment margin is$30,000. The company has $90,000 of common fixed expenses that cannot be traced to either division. Prepare an income statement for Shannon Company that uses the contribution format and is segmented by divisions. In addition, for the company as a whole and for each segment, show each item on the segmented income statements as a percent of sales.

Hudson Co. reports the contribution margin income statement for 2017 below. Using this information, compute Hudson Co.’s (1) break-even point in units and (2) break-even point in sales dollars.

$$\begin{matrix} \text{HUDSON CO. Contribution Margin Income Statement For Year Ended December 31, 2017}\\ \text{Sales (9,600 units at \$225 each)}\ldots\ldots\ldots & \text{\$2,160,000}\\ \text{Variable costs (9,600 units at \$180 each)} \ldots\ldots\ldots & \text{1,728,000}\\ \text{Contribution margin} \ldots\ldots\ldots & \text{432,000}\\ \text{Fixed costs} \ldots\ldots\ldots & \text{324,000}\\ \text{Pretax income } \ldots\ldots\ldots & \text{\$ 108,000}\\ \end{matrix}$$

Sirhuds Inc., a maker of smartwatches, reports the information below on its product. The company uses absorption costing and has a target markup of 40% of absorption cost per unit. Compute the target selling price per unit under absorption costing.

$$\begin{matrix} \text{Direct materials cost} \ldots\ldots\ldots & \text{\$100 per unit}\\ \text{Direct labor cost}\ldots\ldots\ldots & \text{\$30 per unit}\\ \text{Variable overhead cost} \ldots\ldots\ldots & \text{\$8 per unit}\\ \text{Fixed overhead cost} \ldots\ldots\ldots & \text{\$600,000 per year}\\ \text{Variable selling and administrative expenses}\ldots\ldots\ldots & \text{\$3 per unit}\\ \text{Fixed selling and administrative expenses} \ldots\ldots\ldots & \text{\$120,000 per year}\\ \text{Expected production (and sales)}\ldots\ldots\ldots & \text{50,000 units per year}\\ \end{matrix}$$

Mauro Products distributes a single product, a woven basket whose selling price is $15 and whose variable expense is$12 per unit. The company's monthly fixed expense is $4.200. 1. Solve for the company's break-even point in unit sales using the equation method. 2. Solve for the company's break-even point in dollar sales using the equation method and the CM ratio. 3. Solve for the company's break-even point in unit sales using the formula method. 4. Solve for the company's break-even point in dollar sales using the formula method and the CM ratio.