Plymouth Company reports the following information for June :

Sales Revenue $740,000

Variable Cost of Goods Sold 200,000

Fixed Cost of goods sold 197,000

Variable Selling and Administrative Cost 160,000

Fixed Selling and Administrative Costs 77,000

Required:

Calculate the contribution margin and operating income for June using variable costing.

Instructions are listed below.

Explanation:

Giving the following information:

Sales Revenue $740,000

Variable Cost of Goods Sold 200,000

Fixed Cost of goods sold 197,000

Variable Selling and Administrative Cost 160,000

Fixed Selling and Administrative Costs 77,000

Under variable costing method, the product cost or cost of goods sold is calculated only by variable costs:

Sales = 740,000

Variable cost of goods sold = (200,000)

Variable Selling and Administrative Cost = (160,000)

Contribution margin = 380,000

Fixed Cost of goods sold = (197,000)

Fixed Selling and Administrative Costs = (77,000)

Net operating profit = 106,000