Question

Swan Textiles Inc. produces and sells a decorative pillow for $98.00 per unit. In the first month of operation, 2,300 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes: Variable manufacturing costs $23.00 per unit Variable marketing costs $6.00 per unit Fixed manufacturing costs $15 per unit Administrative expenses, all fixed $21.00 per unit Ending inventories: Direct materials -0- WIP -0- Finished goods 500 units What is the contribution margin using variable costing

Answer 1

$124,200

Step-by-step explanation:

Sales revenue = $98 * 1,800 = $176,400

Total variable costs = Total variable manufacturing costs + Total variable marketing costs = ($23 * 1,800) + ($6 * 1,800) = $ 52,200

Contribution margin using variable cost = Sales revenue - Total variable costs = $176,400 - $52,200 = $124,200.