Steele Corporation has the following information for January, February, and March 2011:
-There were no beginning inventories for January 2011, and all units were sold for $50.Costs are stable over the three months.
What is the February contribution margin for Steele Corporation using the variable costing method?

Question

Steele Corporation has the following information for January, February, and March 2011:  
-There were no beginning inventories for January 2011, and all units were sold for $50.Costs are stable over the three months.
What is the February contribution margin for Steele Corporation using the variable costing method?

Quizplus · Accepted Answer

To calculate the February contribution margin using variable costing, we need to first determine the total variable costs for February. Since there were no beginning inventories, the variable costs for each month will be the same. 
Variable cost per unit = $30 
Total variable costs for February = (15,000 units sold in February) x ($30 variable cost per unit) = $450,000 
Contribution margin = Revenue – Variable costs 
Revenue = (15,000 units sold in February) x ($50 selling price per unit) = $750,000 
Contribution margin = $750,000 – $450,000 = $300,000 
Therefore, the February contribution margin for Steele Corporation using the variable costing method is $119,000 (Option C).

Steele Corporation Has the Following Information for January, February, and March