Question

t14

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations:

Selling price	$	88
Units in beginning inventory		0
Units produced		5,200
Units sold		4,900
Units in ending inventory		300
Variable costs per unit:
Direct materials	$	12
Direct labor	$	23
Variable manufacturing overhead	$	2
Variable selling and administrative expense	$	5
Fixed costs:
Fixed manufacturing overhead	$	161,200
Fixed selling and administrative expense	$	63,700

The total contribution margin for the month under variable costing is:

Multiple Choice

• $64,200

• $249,900

• $225,400

• $98,000

Answer 1

Contribution margin under variable costing
	Selling price		$                     88
	Less:
	Variable cost per unit
	Direct material		$                     12
	Direct Labor		$                     23
	Variable Manufacturing Overhead		$                       2
	Variable Selling Expenses		$                       5
	Contribution margin		$                     46
	Units sold		4900
	total contribution margin		$         2,25,400
	(4900 units *46)
	Correct Option: THIRD