Question

Philadelphia Company has the following information for March:

Answer 1

Answer:

a. Manufacturing margin                                  $

Sales                                                                450,000

Less: Fixed manufacturing cost                     70,000

Manufacturing margin                                    380,000

b, Contribution margin                                      $

Sales                                                                 450,000

Less: variable costs:

Variable cost of goods sold                             240,000

Variable selling and administrative expenses 52,000

Contribution margin                                         158,000

c. Income from operations                                    $

Contribution margin                                            158,000

Less: Fixed manufacturing cost                          70,000

Fixed selling and administrative expenses         35,000

Income from operations                                        53,000

Explanation:

Manufacturing margin is the excess of sales over fixed manufacturing cost.

Contribution margin is the excess of sales over total variable costs.

Income from operation is the excess of contribution margin over total fixed costs.