A manufacturing company that produces a single 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)$160,000
B)$88,000
C)$42,600
D)$120,000

Question

A manufacturing company that produces a single 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)$160,000 
B)$88,000 
C)$42,600 
D)$120,000

Quizplus · Accepted Answer

To calculate the total contribution margin under variable costing, we need to first calculate the total variable expenses. 
Total variable expenses = Direct materials + Direct labor + Variable manufacturing overhead 
= $120,000 + $45,000 + $35,000 
= $200,000

Next, we can use the formula: 
Total contribution margin = Sales - Total variable expenses

From the given data, we know that the total sales revenue for the month was $320,000. 
Total contribution margin = $320,000 - $200,000 
= $120,000

Therefore, the correct choice is D ($120,000).

A Manufacturing Company That Produces a Single Product Has Provided