Grant Company reported the following information about the production and sales of its only product during its first month of operations: $$\begin{array} { l l }
\text { Sales ( } \$ 225 \text { per unit) } & \$ 360,000 \
\text { Direct materials used } & \$ 176,000 \
\text { Direct labor } & \$ 100,000 \
\text { Variable factory overhead } & \$ 44,000 \
\text { Fixed factory overhead } & \$ 80,000 \
\text { Variable selling and administrative } & \$ 20,000 \
\text { expenses } & \
\text { Fixed s elling and administrative expenses } & \$ 10,000 \
\text { Endinginventories: Direct materials } & - 0 - \
\text { WIP } & - 0 -\\text { Finished goods }&400 \text { units }
\end{array}$$ The contribution margin under variable costing is:

Question

Grant Company reported the following information about the production and sales of its only product during its first month of operations: $$\begin{array} { l l } 
\text { Sales ( } \$ 225 \text { per unit) } & \$ 360,000 \
\text { Direct materials used } & \$ 176,000 \
\text { Direct labor } & \$ 100,000 \
\text { Variable factory overhead } & \$ 44,000 \
\text { Fixed factory overhead } & \$ 80,000 \
\text { Variable selling and administrative } & \$ 20,000 \
\text { expenses } & \
\text { Fixed s elling and administrative expenses } & \$ 10,000 \
\text { Endinginventories: Direct materials } & - 0 - \
\text { WIP } & - 0 -\\text { Finished goods }&400 \text { units }
\end{array}$$ The contribution margin under variable costing is:

Quizplus · Accepted Answer

The contribution margin is calculated as Sales minus Variable Costs. Sales are $360,000. Variable costs include Direct Materials ($176,000), Direct Labor ($100,000), Variable Factory Overhead ($44,000), and Variable Selling and Administrative Expenses ($20,000), totaling $340,000. Thus, the contribution margin is $360,000 - $340,000 = $20,000.

Grant Company Reported the Following Information About the Production and Sales