Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
14th Edition
ISBN: 9781337541398
Author: Carl Warren; James M. Reeve; Jonathan Duchac
Publisher: Cengage Learning
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Chapter 6, Problem 21E

A.

To determine

Variable Costing

Managers frequently use variable costing for internal purposes for decision making. The cost of goods manufactured includes direct materials, direct labor, and variable factory overhead. Fixed factory overhead is treated as period (fixed) expense.

Contribution Margin

Contribution margin is the excess of manufacturing margin above selling and administrative expenses. Contribution margin is calculated by deducting the variable cost from sales or deducting variable selling and administrative expenses from manufacturing margin.

To calculate: The contribution margin ratio forAtlanta/Baltimore route (data from Exercise 20).

B.

To determine

To prepare: A table for contribution margin analysis to evaluate management action in may.

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Chapter 6 Solutions

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