Question

Aaron Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 102 Units in beginning inventory 0 Units produced 3,700 Units sold 3,220 Units in ending inventory 480 Variable costs per unit: Direct materials $ 19 Direct labor $ 39 Variable manufacturing overhead $ 7 Variable selling and administrative expense $ 4 Fixed costs: Fixed manufacturing overhead $ 61,500 Fixed selling and administrative expense $ 2,800 The total contribution margin for the month under variable costing is:

Answer 1

Answer:

$106,260

Explanation:

Number of units sold = 3,220

Selling price = $ 102

Units in beginning inventory = 0

Units produced = 3,700

Units sold = 3,220

Units in ending inventory = 480

Direct materials = $ 19

Direct labor = $ 39

Variable manufacturing overhead = $ 7

Variable selling and administrative expense = $ 4

Total variable cost per unit:

= Direct materials + Direct labor + Variable manufacturing overhead + Variable selling and administrative expense

= $19 + $39 + $7 + $4

= $69

Variable cost:

= Total variable cost per unit × Number of units sold

= $69 × 3,220

= $222,180

Total sales:

= Selling price per unit × Number of units sold

= $ 102 × 3,220

= $328,440

Therefore, the total contribution margin for the month under variable costing is:

= Total sales - Variable cost

= $328,440 - $222,180

= $106,260