Acctg 4B Ron Dustin: A 35541-On ACCOUNTING 8 Weeks ick Study Exercises Part 2 KQ

Question

Acctg 4B Ron Dustin: A 35541-On ACCOUNTING 8 Weeks ick Study Exercises Part 2 KQuestion 3 (of 11) value: 3.00 points Quick Study 19-9 Computing manufacturing margin LO P2 D'Souza Company sold 10,000 units of its product at a price of $80 per unit. Total variable cost is $50 per unit, consisting of $40 in variable production cost and $10 in variable selling and administrative cost. Compute the manufacturing (production) margin for the company under variable costing. D'SOUZA COMPANY Manufacturing Margin Units S per unit Total Less References eBook & Resources and using variable costin

Explanation / Answer

Variable cost (Selling and admin) - $10* 10000 units = $ 100000

Variable cost (Production) - $40* 10000 units = $ 400000

Total variable cost - ( 100000+400000) = 500000

Proportion of variable cost ( Production) = ($400000/$500000) * 100 = 80%

Total sales = 10000 units * $8 = $800000

Less variable cost = $50 * 10000 units = $500000

Contribution = $ 800000 - $500000 = $300000

Contribution( manufacturing margin) = Total contribution*Proportion of variable cost ( production)

= $300000* 80% = $240000

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