Paddleboard Incorporated Builds Three Products: River,Lake,and Ocean Total Annual Fixed Costs Are $765,000

Essay

Paddleboard Incorporated builds three products: River,Lake,and Ocean.Information for these three products is shown below:
$\begin{array}{lcccc}& \text { River } & \text { Lake } & \text { Ocean } & \text { Total } \\\text { Selling price per unit } & \$ 300 & \$ 250 & \$ 275 & \\\text { Variable cost per unit } & \$ 175 & \$ 150 & \$ 125 & \\\text { Expected unit sales (annual) } & 14,000 & 2,000 & 4,000 & 20,000 \\\text { Sales mix } & 70 \% & 10 \% & 20 \% & 100 \%\end{array}$
Total annual fixed costs are $765,000.Assume the sales mix remains the same at all levels of sales.
Assume each scenario below is independent of the other.Unless stated otherwise,assume the variables are the same as in the base case.
(1)Prepare a contribution margin income statement for the base case.
(2)How will total profit change if the Lake sales price increases by 15 percent? (Compare your result with requirement 1 above. )
(3)Go back to the base case.How will total profit change if the River sales volume decreases by 2,000 units and the sales volume of other products remains the same? (Compare your result with requirement 1 above. )
(4)Go back to the base case.How will total profit change if fixed costs decrease by 10 percent? (Compare your result with requirement 1 above. )