Answer:
Contribution margin under variable costing is $660,000
Explanation:
As we know that, the contribution margin equals to
Sales - variable cost
In the variable costing, we recognized the variable expense and the variable selling and administrative cost
So,
The variable cost could be
1. Variable expense per unit= Direct material per unit + direct labor per unit + variable overhead
= $10 + $12 + $3
= $25
So, variable expense = 20,000 units × $25 = $500,000
And, the variable selling and administrative cost = 20,000 units × $2 = $40,000
Sales is = 20,000 units × $60 = $1,200,000
Now put these values to the above formula
So, the value would equal to
= $1,200,000 - $500,000 - $40,000
= $660,000
