The following costs result from the production of 24,000 DVD sets manufactured by Astra Company for the year ended December 31, 2008. The DVD sets will sell for $30 each. The company has a 30% income tax rate.

Variable manufacturing costs
Plastic for DVD sets...........................................$ 3,000
Wages of assembly workers....................................60,000
Labeling.......................................................... 6,000
Variable selling costs
Sales commissions...............................................12,000
Fixed manufacturing costs
Rent on factory...................................................13,500
Factory cleaning service........................................ . 9,040
Factory machinery depreciation................................ 30,000
Fixed selling and administrative costs
Lease of office equipment....................................... .2,100
Systems staff salaries............................................ 30,000
Administrative management salaries............................240,000

Required

1. Prepare a contribution income statement for the company.
2. Compute its contribution margin per unit and its contribution margin ratio.

Analysis Component
3. Interpret the contribution margin and contribution margin ratio from part 2.