Question 1
Assume sales revenue of $50,000, variable costs of $22,000, and fixed costs of $25,000. Prepare a contribution format income statement.
Question 2
Walker Boat Company produces bass boats. The following comments were found in the "Management's Discussion and Analysis" section of the annual report.
"Bass boat production includes a significant amount of robotic manufacturing costs, a portion
of which do not vary with production rates."
As industry practice, Walker spreads its robotic costs over the estimated number of boats that are expected to be produced for each type of bass boat. At the end of the previous year, the number of boats produced was 2,400 while the expected number of boats to be produced in the current year is 2,700.
Required:
| a. | What effect would the change in level of boats produced have on the total robotic |
costs?
| b. | What effect would the change in level of boats produced have on the unit costs of the |
boats?
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