The following costs result from the production and sale of 4,450 drum sets manufactured by Tight Drums Company for the year ended December 31, 2019. The drum sets sell for $295 each. The company has a 30% income tax rate.

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
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

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

Explanation:

Sales  1,312,750  [4450*295]

Variable Costs

Variable production costs :

Plastic for casing  185,000  

Wages of assembly workers  510,000  

Drum stands 230,000  

Variable selling costs :

Sales commission  175,000

Total Variable Costs  1,100,000  

Contribution Margin  312,750

Less: Fixed Costs

Taxes on factory  5000

Factory maintenance  10,000

Factory machinery depreciation  70,000

Lease of equipment for sales staff  10,000

Accounting staff salaries  60,000

Administrative management salaries  140,000

Total fixed costs 295,000

Profit Before Tax  17,750

Less: Income tax [17,750*30%] 5,350

Net income 12,425

cognitive overload: having a lot on your mind impairs decision-making and tends to result in the simplest, but not necessarily best, option being selected.

empathy gaps: overlooking how you might feel in a different situation can result in unnecessary purchases, such as overbuying when shopping for food on an empty stomach.

optimism and overconfidence: wearing rose-tinted glasses and having unrealistic expectations about the future can affect money management and leave you unprepared for a change in circumstance.

instant gratification: seeking instant gratification drives impulsive spending and can undermine long-term planning and savings.

harmful habits: automatic or mindless behaviour can amplify a poor financial decision as it becomes a recurring event.

social norms: we are heavily influenced by the actions of others; while this can be in certain circumstances, it also contributes to the pressure to keep up with the joneses through conspicuous consumption.

its ii) i did this test

explanation: