Question

# Zee Corporation was operating at 100% of capacity during its first month of operations with the...

Zee Corporation was operating at 100% of capacity during its first month of operations with the following results:

 Sales (160 units) \$204,000 Production costs (200 units): Direct materials \$100,000 Direct labor 60,000 Variable factory overhead 40,000 Fixed factory overhead 1,000 201,000 Operating expenses: Variable operating expenses \$ 12,000 Fixed operating expenses 2,000 14,000

What is the amount of the manufacturing margin that would be reported on the variable costing income statement?

Select one:

a. \$44,000

b. \$4,000

c. \$30,000

d. \$38,800

The amount of the manufacturing margin that would be reported on the variable costing income statement is calculated below:

Cost Per Unit (\$) (A) Total Units(B) \$ (A*B)
Sale \$204,000/160 Units =\$1275 160   204,000
Less: Variable Cost
Direct Material \$100,000/ 200 Units = \$500   160   80,000
Direct Labor \$ 60,000/200 Units = \$300   160   48,000
Variable Factory Overheads \$40,000/ 200 Units = \$200 160   32,000
Manufacturing Margin \$ 44,000

Manufacturing Margin = \$ 44,000

So correct answer is option (a) or \$44,000

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