A business operated at 100% of capacity during its first month and incurred the following costs:Production costs (5,000 units):Direct materialsDirect laborVariable factory overheadFixed factory overheadOperating expenses:Variable operating expenses$17,000Fixed operating expenses1,00018,000If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of contribution margin that would be reportedon the variable costing income statement isOa. $51,400Ob. $52,000Oc. $54,000Od. $53,000$70,00020,00010,0002,000$102,000

The difference between Total Sales and Total Variable Cost is known as Contribution. All the direct…

If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of contribution margin that would be reported on the variable costing income statement is Oa. $51,400 Ob. $52,000 Oc. $54,000 Od. $53,000

If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of contribution margin that would be reported on the variable costing income statement is Oa. $51,400 Ob. $52,000 Oc. $54,000 Od. $53,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Pricing

Pricing is used as a term in finance and economics, pricing is the process of fixing a value for a product or a service. Pricing establishes a value for a product or service that the customer has to pay. A business can choose from different strategies while deciding to set prices.

Question

100%

A business operated at 100% of capacity during its first month and incurred the following costs:
Production costs (5,000 units):
Direct materials
Direct labor
Variable factory overhead
Fixed factory overhead
Operating expenses:
Variable operating expenses
$17,000
Fixed operating expenses
1,000
18,000
If 1,000 units remain unsold at the end of the month and sales total $150,000 for the month, the amount of contribution margin that would be reported
on the variable costing income statement is
Oa. $51,400
Ob. $52,000
Oc. $54,000
Od. $53,000
$70,000
20,000
10,000
2,000
$102,000

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