Ask Question
14 April, 11:17

A business operated at 100% of capacity during its first month, with the following results: Sales (90 units) : $90,000 Production costs (100 units) : Direct materials$40,000 Direct labor20,000 Variable factory overhead2,000 Fixed factory overhead7,00069,000 Operating expenses: Variable operating expenses$8,000 Fixed operating expenses1,0009,000 The amount of contribution margin that would be reported on the variable costing income statement is a.$26,200 b.$29,700 c.$34,200 d.$20,200

+1
Answers (1)
  1. 14 April, 11:24
    0
    The correct answer is C.

    Explanation:

    Giving the following information:

    Sales (90 units) : $90,000

    100 units:

    Direct materials = $40,000

    Direct labor = $20,000

    Variable factory overhead = $2,000

    Under the variable costing method, the unitary product cost is calculated using the direct material, direct labor, and variable overhead.

    We need to calculate the unitary variable cost:

    Unitary variable cost = total variable cost / number of units

    Unitary variable cost = (40,000 + 20,000 + 2,000) / 100 = $620 per unit

    Now, we can calculate the contribution margin:

    Total contribution margin = total sales - total variable cot

    Total contribution margin = 90,000 - 90*620 = $34,200
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “A business operated at 100% of capacity during its first month, with the following results: Sales (90 units) : $90,000 Production costs ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers