Question

Alexis Co. reported the following information for May: Part A Units sold 5,000 units Selling price per unit $ 800 Variable manufacturing cost per unit 520 Sales commission per unit - Part A 80 What is the manufacturing margin for Part A? $1,000,000 $1,400,000 $3,600,000 $2,600,000

Answer 1

Answer:

Hence, the manufacturing margin for Part A is $1,400,000

Therefore, the correct option is B i.e $1,400,000

Explanation:

The manufacturing margin is somewhat same like contribution margin. SO, here we applying the formula of contribution margin.

For computing the manufacturing margin for Part A, the calculation is shown below.

Manufacturing margin = (Selling Price per unit  × Number of units) - (Variable manufacturing cost per unit  × Number of units)

= (5,000 × $800) - ($5000 × $520)

= $4,000,000 - $2,600,000

= $1,400,000

Hence, the manufacturing margin for Part A is $1,400,000

Therefore, the correct option is B i.e $1,400,000