A manufacturing company that produces a single product has provided the followin

Question

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: S114 Selling price Units in beginning inventory 0 Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct Labor Variable manufacturing overhead S3 Variable selling and administrative S4 Fixed costs: fixed manufacturing overhead 98,800 Fixed selling & administrative $57,600 3,800 3,600 200 S38 S22 a. What is the total contribution margin?$ b. What is the gross margin?$ c. What is the net operating income using variable costing? $ d. What is the net operating income using absorption costing? $

Explanation / Answer

Absorption Variable costing unit product unit product cost cost Direct materials 38 38 direct labor 22 22 Variable MOH 3 3 Fixed MOH(98800/3800) 26 unit product cost 89 63 a) Contribution = Sales - variable manufacturing cost - variable selling & adm cost 3,600 *(114 - 63-4) 169200 answer b) Gross margin = sales - cost of goods sold 3600 *(114-89) 90000 answer c) Net operating income(variable)=contribution - total fixed expense 169,200-(98,800+57,600) 12800 answer d) Net operating income(absorption) = gross margin - total selling expense 90,000- (3600*4+57,600) 18000 answer

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