Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 95 Units in beginning inventory 0 Units produced 3,400 Units sold 3,030 Units in ending inventory 370 Variable costs per unit: Direct materials $ 20 Direct labor $ 34 Variable manufacturing overhead $ 6 Variable selling and administrative expense $ 4 Fixed costs: Fixed manufacturing overhead $ 64,700 Fixed selling and administrative expense $ 2,800 The total contribution margin for the month under variable costing is:

Question

Alberto Ortega

Business

8 August, 13:02

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 95 Units in beginning inventory 0 Units produced 3,400 Units sold 3,030 Units in ending inventory 370 Variable costs per unit: Direct materials $ 20 Direct labor $ 34 Variable manufacturing overhead $ 6 Variable selling and administrative expense $ 4 Fixed costs: Fixed manufacturing overhead $ 64,700 Fixed selling and administrative expense $ 2,800 The total contribution margin for the month under variable costing is:

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Lina Howe · Answer 1

Total Contribution Margin = ($31 * 3,030) = $93,930

Explanation:

Variable Units Cost

Direct Material $20

Direct Labor $34

Variable manufacturing cost $6

Variable Selling and Admin cost $4

Total Variable Cost per unit = $64

Contribution Margin = $95 - $64

=$31

To get Total Contribution Margin we take the Contribution per unit multiply with sold units meaning that is the contribution of units sold after deducting variable costs.