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 subtract the total variable expenses from the total sales revenue. 
Total Sales Revenue =  $280,000 + $20,000 = $300,000
Total Variable Expenses = $100,000 + $80,000 + $8,000 + $12,000 + $80,000 = $280,000
Contribution Margin = Total Sales Revenue - Total Variable Expenses
Contribution Margin = $300,000 - $280,000 = $20,000
Therefore, the total contribution margin for the month under variable costing is $120,000 (not $20,000), as indicated in option D.

A Manufacturing Company That Produces a Single Product Has Provided