Question

A manufacturing company that produces a single product has provided the following data concerning its most recent month of operation. The total contribution margin for the month under variable costing is

Answer 1

The contribution margin for the month is $120,000

Step-by-step explanation:

The computation of the contribution margin for the month is as follows;

But before that we do the following calculations

Total variable cost per unit is

Direct materials $13

Direct labor $35

Variable manufacturing overhead $1

Variable selling and administrative $10

Total is $59

And, the selling price per unit is $89

So, the contribution margin per unit is

= Selling price per unit - variable cost per unit

= $89 - $59

= $30

And, the number of unit sold is 4,000

So, the contribution margin for the month is

= 4,000 × $30

= $120,000

Hence, the contribution margin for the month is $120,000