Question

Variable Costing

Norwood Company has the following information for September:

Sales $380,000
Variable cost of goods sold $182,400
Fixed manufacturing costs $57,000
Variable selling and administrative expenses $34,200
Fixed selling and administrative expenses $2,800

Determine the following for Norwood Company for the month of September:

a. Manufacturing margin _________$

b. Contribution margin ___________$

c. Income from operations __________$

Answer 1

a. $197,600

b. $163,400

c. $108,600

Step-by-step explanation:

a. Manufacturing margin = Sales - Variable cost of goods sold

= $380,000 - $182,000

= $197,600

b. Contribution margin = Manufacturing margin - Variable selling and administrative expenses

= $197,600 - $34,200

= $163,400

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

= $163,400 - $57,000 - $2,800

= $108,600