Question

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations:Selling price $102 Units in beginning inventory 0 Units produced 4,200 Units sold 3,570 Units in ending inventory 630 Variable costs per unit: Direct materials $19 Direct labor $41 Variable manufacturing overhead $7 Variable selling and administrative expense $4 Fixed costs: Fixed manufacturing overhead $51,100 Fixed selling and administrative expense $3,100The total contribution margin for the month under variable costing is:____.a. $59,570.b. $56,470.c. $124,950.d. $110,670.

Answer 1

Answer:

Option d (110,670) is the right option.

Explanation:

The given values are:

Selling price,

= $102 per unit

Fixed manufacturing overhead,

= $51,100

Fixed selling and administrative expense,

=  $3,100

Now,

Sales will be:

= $3570\times 102$

= $364,140$ ($)

Variable expenses:

Direct material will be:

= $19\times 3570$

= $67,830$ ($)

Direct labor will be:

= $41\times 3570$

= $146,370$ ($)

So,

Variable manufacturing overhead will be:

= $7\times 3570$

= $24,990$ ($)

Its selling as well as administrative will be:

= $4\times 3570$

= $14,280$

Hence,

The contribute margin will be:

= $364,140-(67,830+146,370+24,990+14,280)$

= $360,140-253,470$

= $110,670$ ($)