Swan Textiles Inc. produces and sells a decorative pillow for $98.00 per unit. In the first month of operation, 2,300 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:

What is the contribution margin using variable costing?
A) $135,000
B) $124,200
C) $165,600
D) $123,500

Question

Swan Textiles Inc. produces and sells a decorative pillow for $98.00 per unit. In the first month of operation, 2,300 units were produced and 1,800 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:

What is the contribution margin using variable costing?

What is the contribution margin using variable costing?
A) $135,000 
B) $124,200 
C) $165,600 
D) $123,500

Quizplus · Accepted Answer

Total sales = $98.00 × 1,800 = $176,400
Variable cost of goods sold = $23.00 × 1,800 = $41,400
Variable marketing costs = $6.00 × 1,800 = $10,800
Total variable costs = $52,200
Contribution margin = $176,400 - $52,200 = $124,200