Duck Textiles Inc. produces and sells a decorative pillow for 98 per unit. In the first month of...
Question:
Duck Textiles Inc. produces and sells a decorative pillow for 98 per unit. In the first month of operation, 2,300 units were produced and 1,900 units were sold. Other information for the month includes:
| Variable manufacturing costs | 22 euro per unit |
| Variable marketing costs | 16 euro per unit |
| Fixed manufacturing costs | 15 euro per unit |
| Administrative expenses, all fixed | 21 euro per unit |
| Ending inventories: | |
| Direct materials | 0 |
| WIP | 0 |
| Finished goods | 500 units |
What is the contribution margin using variable costing?
Costing Method:
In management, absorption costing and variable costing are two costing methods used to calculate the costs of a production process. The absorption costing complies with the Generally Accepted Accounting Principles, while the variable costing is used for management purposes.
Answer and Explanation: 1
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View this answerThe amount of contribution margin per unit depends on the method adopted by the company. In the above problem, Duck Textiles Inc. uses a variable...
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Managers make decisions about setting prices using absorption and variable costing. Learn more about the different types of costing and explore a comparison of variable costing versus absorption costing.
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