Question

A business operated at 100% of capacity during its first month and incurred the following costs:

Production costs (10,000 units):
Direct materials $140,000
Direct labor 40,000
Variable factory overhead 20,000
Fixed factory overhead 4,000 $204,000
Operating expenses:
Variable operating expenses $ 34,000
Fixed operating expenses 2,000 36,000 ​
Required:
If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what is the amount of the manufacturing margin that would be reported on the variable costing income statement?a. not reportedb. $104,000c. $106,000d. $140,000

Answer 1

Gross manufacturing margin= 140,000

Step-by-step explanation:

Giving the following information:

Production costs (10,000 units):

Direct materials $140,000

Direct labor 40,000

Variable factory overhead 20,000

Total variable costs= 200,000

Units sold= 8,000 units

The manufacturing margin is the result of deducting from the sales the variable components.

Unitary variable costs= 200,000/10,000= $20

Sales= 300,000

Variable costs= (20*8,000)= 160,000

Gross manufacturing margin= 140,000