Question

Marley Company has the following information for March: Sales $912,000 Variable cost of goods sold 474,000 Fixed manufacturing costs 82,000 Variable selling and administrative expenses 238,100 Fixed selling and administrative expenses 54,700 Determine the following for Marley Company for the month of March:

a. Manufacturing margin
b. Contribution margin
c. Income from operations

Answer 1

Manufacturing Margin: Manufacturing margin Is the difference between sales and the variable cost of good sold .

Contribution margin: The contribution margin is the amount which is derived from sales revenue, after subtracting the variable expenses. This amount contributes toward covering fixed expense and then towards profit for the period

Net income: Net Income u the income after deducting all the expense, from the gross Income. It is also termed as net profit or net earning

a. Computation of the manufacturing margin for the month of March:

Manufacturing margin = Net sales - Variable cost of goods sold

Manufacturing margin = $912,000 - $474,000

Manufacturing margin = $438,000

Thus, the manufacturing margin for the month of March is $438,000 .

b. Computation of the contribution margin for the month of March:

Contribution margin = Manufacturing margin - Variable selling

Contribution margin = $438,000 - $238,100

Contribution margin = $199,900

Thus, the contribution mar gm for the month of march is $199,900

c. Computation of the income from operations for the month of March:

Income from operations = Contribution margin - Fixed manufacturing costs - Fixed selling and administrative expenses

Income from operations =$199,900 - $82,000 - $54,700

Income from operations = $63,200

Thus, the income from operations for the month of March is $63,200.