A business operated at 100% of capacity during its first month, with the following results:Sales (96 units) $480,000Production costs (120 units): Direct materials$60,000 Direct labor15,000 Variable factory overhead27,000 Fixed factory overhead24,000126,000Operating expenses: Variable operating expenses$5,690 Fixed operating expenses3,8309,520The amount of contribution margin that would be reported on the variable costing income statement isa.$479,880b.$470,480c.$388,880d.$392,710

Contribution margin = Sales - Variable cost Production cost for 96 units = (Direct materials +…

Answered: A business operated at 100% of capacity…

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 4E: On March 31, the end of the first month of operations, Barnard Inc. manufactured 15,000 units and...

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

Sales (96 units)		$480,000
Production costs (120 units):
Direct materials	$60,000
Direct labor	15,000
Variable factory overhead	27,000
Fixed factory overhead	24,000	126,000
Operating expenses:
Variable operating expenses	$5,690
Fixed operating expenses	3,830	9,520

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

a.$479,880

b.$470,480

c.$388,880

d.$392,710

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