Answer:
Contribution Margin $ 920,000 Absorption Costing
Contribution Margin $ 860,000 Variable Costing
Explanation:
Hinge Manufacturing
Absorption Costing
Sales $1580000
Cost of Goods sold
Less Variable Costs $420000
Manufacturing Margin $1160,000
Less Fixed Costs $240000
Selling and Administrative expenses
Variable $300,000
Fixed $360,000
Net Income $ 260,000
Hinge Manufacturing
Variable Costing
Sales $1580000
Cost of Goods sold
Less Variable Costs $420,000
Selling and Administrative expenses Variable $300,000
Contribution Margin $ 860,000
Less Fixed Costs $240000
Selling and Administrative expenses Fixed $360,000
Net Income $ 260,000
Answer:
$860,000
Explanation:
contribution margin = total sales - total variable costs
contribution margin = $1,580,000 - $720,000 = $860,000
The contribution margin is basically the difference between sales revenue and the variable costs associated to the production and sale of the goods. The contribution margin is used to pay fixed costs and after break even point is reached, it increases profits.
