Clemeson Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The total contribution margin for the month under variable costing is:
A) $70,400
B) $149,600
C) $166,600
D) $91,800

Question

Clemeson Corporation, which has only one product, has provided the following data concerning its most recent month of operations:  The total contribution margin for the month under variable costing is:
A) $70,400 
B) $149,600 
C) $166,600 
D) $91,800

Quizplus · Accepted Answer

Total revenues for the month: $400,000
Variable expenses:
- Cost of goods sold: $196,000
- Variable selling expenses: $22,000
Total variable expenses: $218,000
Contribution margin = Total revenues - Total variable expenses = $400,000 - $218,000 = $182,000
If we assume that fixed expenses for the month were $32,400, we can use the contribution margin to calculate operating income under variable costing:
Operating income = Contribution margin - Fixed expenses = $182,000 - $32,400 = $149,600. Therefore, B is the correct answer.

Clemeson Corporation, Which Has Only One Product, Has Provided the Following