Answer:
Manufacturing margin = $210,000
Contribution margin = $158,000
Operating income = $53,000
Explanation:
Requirement 1
We know,
Manufacturing margin = Sales revenue - Cost of goods sold
given,
Sales revenue = $450,000
Cost of goods sold = $240,000
Putting the values into the formula, we can get
Manufacturing margin = Sales revenue - Cost of goods sold
Manufacturing margin = $450,000 - $240,000
Manufacturing margin = $210,000
Manufacturing margin also called gross margin.
Requirement 2
Contribution margin = Sales revenue - Variable expense
Given,
Sales revenue = $450,000
Variable expense = Variable cost of goods sold + Variable selling and administrative expenses
Given,
Variable cost of goods sold = $240,000
Variable selling and administrative expenses = $52,000
Putting the values into the formula, we can get
Variable expense = $240,000 + $52,000
Or, Variable expense = $292,000
Therefore,
Contribution margin = $450,000 - $292,000
Contribution margin = $158,000
Requirement 3
Operating income = Contribution margin - Fixed expense
Given,
Contribution margin = $158,000 (From requirement 2)
Fixed expense = Fixed manufacturing costs + Fixed selling and administrating expenses.
Fixed expense = $70,000 + $35,000
Fixed expense = $105,000
Putting the values into the formula, we can get
Operating income = Contribution margin - Fixed expense
Operating income = $158,000 - $105,000
Operating income = $53,000
