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# Total Contribution Margin and Gross Margin

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Pinewood Company, which has only one product, has given the following data
regarding its last month of operations:

Selling Price.......................................................................\$200
Units in beginning inventory....................................0
Units produced...........................................................5,000
Units sold....................................................................4,800
Units in ending inventory..........................................400

Variable cost per unit:
Direct materials...............................................\$50
Direct Labor.....................................................\$25

Fixed Costs:

1. What is the total contribution margin for the month step by step under the variable costing approach?

2. What is the total gross margin for the month step by step under the absorption costing approach?

#### Solution Preview

1. What is the total contribution margin for the month step by step under the variable costing approach?

Total contribution margin = (Selling price - total variable cost) units sold
Selling Price = 200
Total variable cost is
Direct materials...............................................\$50
Direct ...

#### Solution Summary

The solution explains how to calculate gross margin and contribution margin

\$2.19