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21 May, 03:26

A business operated at 100% of capacity during its first month and incurred the following costs:

Production costs (10,000 units):

Direct materials $140,000

Direct labor 40,000

Variable factory overhead 20,000

Fixed factory overhead 4,000 $204,000

Operating expenses:

Variable operating expenses $ 34,000

Fixed operating expenses 2,000 36,000

Required:

If 2,000 units remain unsold at the end of the month and sales total $300,000 for the month, what is the amount of the manufacturing margin that would be reported on the variable costing income statement? a. not reportedb. $104,000c. $106,000d. $140,000

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  1. 21 May, 07:10
    0
    Gross manufacturing margin = 140,000

    Explanation:

    Giving the following information:

    Production costs (10,000 units):

    Direct materials $140,000

    Direct labor 40,000

    Variable factory overhead 20,000

    Total variable costs = 200,000

    Units sold = 8,000 units

    The manufacturing margin is the result of deducting from the sales the variable components.

    Unitary variable costs = 200,000/10,000 = $20

    Sales = 300,000

    Variable costs = (20*8,000) = 160,000

    Gross manufacturing margin = 140,000
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