Purchase Solution

Total Contribution Margin and Gross Margin

Not what you're looking for?

Ask Custom Question

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
Variable Manufacturing Overhead.................$5
Variable Selling & Administrative..................$15

Fixed Costs:
Fixed Manufacturing Overhead.....................$90,000
Fixed Selling and Administrative...................$35,000

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?

Attachments
Purchase this Solution
Solution Summary

The solution explains how to calculate gross margin and contribution margin

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 ...

Purchase this Solution
Free BrainMass Quizzes
Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

Introduction to Finance

This quiz test introductory finance topics.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

View More Free Quizzes
Related BrainMass Solutions

  • Compute the Gross Margin and Contribution Margin

    This solution illustrates how to compute the gross margin and contribution, and discusses the effect of changes in fixed and unit variable costs on the contribution margin.

  • Maso Company's Gross Margin and Contribution Margin

    expenses total $130,000 At this sales level, its contribution margin would be: A) $295,000 B) $180,000 C) $220,000 D) $200,000 Contribution margin question At a sales level of $365,000, Maso Company's gross margin is $20,000 less than its contribution

  • Total Contribution Margin for Porter Company

    Direct materials 91,500 Total manufacturing cost 350,000 Gross Margin = $450,000 The solution explains how to calculate the total contribution margin and gross margin

  • Contribution Margin and Gross Profit Difference

    This solution helps to find out the difference between gross profit and contribution margin.

  • Able Co: Income statement, break even and CVP analysis

    480,500 Total $640,500 $410,000 $1,050,500 (a) Sales - Cost of Goods Sold (Expense) Gross Margin or Gross Profit Selling & Admin (or GS&A or Operating expenses) Net income (Operating income) (b) Revenue -

  • Calculation of variable cost and contribution margin

    The company reported a $600,000 gross margin on its 2006 financial statements. Determine the total variable cost, the variable cost per unit, and the total contribution margin.

  • Managerial Accounting

    The total material cost is 15X500=$7,500. The expected gross margin is 30,000-7,500=$22,500 (2) What is the expected contribution margin next month? The contribution margin is sales - total variable cost. Total sales are $30,000.

  • Example of Variable Cost

    a) Gross profit - Total revenue of a business minus the cost of goods it sold. Gross profit does not include income from incidental sources and also excludes selling and administrative expenses.

  • Gross Margin Versus Contribution Margin

    294793 Gross Margin Versus Contribution Margin When making decision why is it important for managers to distinguish the gross margin and contribution margin? Please explain?

View More Related Solutions