Question

Philadelphia Company has the following information for March:

Sales	$479,798
Variable cost of goods sold	206,440
Fixed manufacturing costs	78,799
Variable selling and administrative expenses	53,060
Fixed selling and administrating expenses	34,780

a. Determine the March manufacturing margin.
$

b. Determine the March contribution margin.
$

c. Determine the March income from operations for Philadelphia Company.
$

Answer 1

a. Manufacturing margin
= Gross margin
Calculation of gross margin:
Particulars	Amount
Sales	$479,798
Less: Cost of goods sold:
Variable cost of goods sold	$206,440
Fixed manufacturing costs	$78,799
Gross margin/Manufacturing margin	$194,559
b. Contribution margin
= Sales - Variable costs
= Sales - (Variable cost of goods sold + Variable selling and administrative expenses)
= $479,798 - ($206,440 + $53,060)
= $220,298
c. Income from operations
Particulars	Amount
Sales	$479,798
Less: Variable costs:
Variable cost of goods sold	$206,440
Variable selling and administrative expenses	$53,060
Contribution margin	$220,298
Less: Fixed cost
Fixed manufacturing costs	$78,799
Fixed selling and administrative expenses	$34,780
Net profit / Income from operations	$106,719