A business operated at 100% of capacity during its first month, with the following results:Sales (104 units) $520,000Production costs (130 units): Direct materials$65,000 Direct labor16,250 Variable factory overhead29,250 Fixed factory overhead26,000136,500Operating expenses: Variable operating expenses$5,430 Fixed operating expenses3,1608,590The amount of contribution margin that would be reported on the variable costing income statement isa.$423,010b.$519,870c.$511,410d.$426,170

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Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 1E: At the end of the first year of operations, 21,500 units remained in the finished goods inventory....

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A business operated at 100% of capacity during its first month, with the following results:

Sales (104 units)		$520,000
Production costs (130 units):
Direct materials	$65,000
Direct labor	16,250
Variable factory overhead	29,250
Fixed factory overhead	26,000	136,500
Operating expenses:
Variable operating expenses	$5,430
Fixed operating expenses	3,160	8,590

The amount of contribution margin that would be reported on the variable costing income statement is

a.$423,010

b.$519,870

c.$511,410

d.$426,170

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