Final answer:
The manufacturing margin for D’Souza Company, under variable costing, is calculated by subtracting the variable production cost from the sale price per unit and then multiplying by the total units sold, resulting in $317,800.
Step-by-step explanation:
The student's question involves calculating the manufacturing or production margin under variable costing. According to the information provided, D’Souza Company sold 7,000 units at a price of $86.00 per unit, with a total variable cost of $51.20 per unit. The variable production cost is $40.60, and the variable selling and administrative cost is $10.60 per unit. To calculate the manufacturing margin, we subtract the variable production cost from the sales price for each unit and then multiply by the total number of units sold. This can be shown as:
Manufacturing Margin = (Sale Price per Unit - Variable Production Cost per Unit) × Total Units Sold
Manufacturing Margin = ($86.00 - $40.60) × 7,000
Manufacturing Margin = $45.40 × 7,000
Manufacturing Margin = $317,800
Therefore, the manufacturing margin for D’Souza Company using variable costing for the sale of 7,000 units is $317,800.