Question

Variable Costing Marsich Company has the following information for February: Sales $490,000 Variable cost of goods sold 220,500 Fixed manufacturing costs 83,300 Variable selling and administrative expenses 53,900 Fixed selling and administrative expenses 34,300 Determine the following for Marsich Company for the month of February: a. Manufacturing margin $ b. Contribution margin $ c. Operating income

Answer 1

Answer:

          a. Manufacturing margin = $269,500

          b. Contribution margin = $436,100

          c. Operating income     = $318,500

Explanation:

The formula of Manufacturing margin , Contribution margin & operating income is shown below. Along with it, the computation is also made.

Manufacturing margin = Sales - Variable cost of goods sold

                                  = $490,000 -  $220,500

                                  = $269,500

Contribution margin = Sales - Variable selling and administrative expenses

                                  = $490,000 - $53,900

                                  = $436,100

Operating income = Contribution margin - (Fixed manufacturing costs  + Fixed selling and administrative expenses )

                             = 436,100 - $(83,300 + 34,300)

                             = $318,500

Thus, a. Manufacturing margin = $269,500

          b. Contribution margin = $436,100

          c. Operating income     = $318,500