Remington Company has provided the following data for the fourth quarter of the most recent year:

Remington Company's data
Sales $1,400,000
Direct labor 290,000
Direct materials 196,000
Variable manufacturing overhead 174,000
Fixed selling expense 165,000
Fixed administrative expense 188,000
Variable administrative expense 192,000
Fixed manufacturing overhead 62,000
Variable selling expense 209,000

Assume that direct labor is a variable cost and that there were no beginning or ending inventories. What was the company’s total contribution margin for the quarter?

Question

Remington Company has provided the following data for the fourth quarter of the most recent year:

Remington Company's data
Sales	$1,400,000
Direct labor	290,000
Direct materials	196,000
Variable manufacturing overhead	174,000
Fixed selling expense	165,000
Fixed administrative expense	188,000
Variable administrative expense	192,000
Fixed manufacturing overhead	62,000
Variable selling expense	209,000

Assume that direct labor is a variable cost and that there were no beginning or ending inventories. What was the company’s total contribution margin for the quarter?

BlackTom AI · Accepted Answer

Contribution margin equals sales minus all variable costs, so identify and subtract every variable cost from sales.

1) Relevant knowledge points and concepts
- Contribution margin = Sales − Total variable costs.
- Variable costs include direct materials, direct labor (stated as variable), variable manufacturing overhead, and all variable selling and administrative expenses.
- Fixed costs (fixed manufacturing overhead, fixed selling, fixed administrative) are excluded from contribution margin.
- No beginning or ending inventories means all manufacturing costs for the period are treated as period costs; variable manufacturing costs are fully included in variable costs.

2) Step‑by‑step reasoning and calculations
- Sales = $1,400,000.
- List variable costs given:
  - Direct labor = $290,000
  - Direct materials = $196,000
  - Variable manufacturing overhead = $174,000
  - Variable selling expense = $209,000
  - Variable administrative expense = $192,000
- Sum the variable costs:
  - First add direct labor and direct materials: 290,000 + 196,000 = 486,000
  - Add variable manufacturing overhead: 486,000 + 174,000 = 660,000
  - Add variable selling expense: 660,000 + 209,000 = 869,000
  - Add variable administrative expense: 869,000 + 192,000 = 1,061,000
- Compute contribution margin:
  - Contribution margin = Sales − Total variable costs
  - = 1,400,000 − 1,061,000 = 339,000

3) Why the correct answer is correct
- The contribution margin purposely excludes fixed costs and includes all variable costs. Using the complete set of variable costs above yields $339,000, which correctly measures the amount available to cover fixed costs and profit.

4) Why the other options are incorrect
- $740,000 would result from subtracting only variable manufacturing costs (DM+DL+VMOH = $660,000) from sales: 1,400,000 − 660,000 = 740,000. This ignores variable selling and administrative costs and thus overstates the contribution margin.
- $914,000 equals 1,400,000 − 486,000 (subtracting only DM and DL), which ignores many variable costs.
- $76,000 has no correct basis from the listed costs and understates variable costs or misallocates fixed costs.

Conclusion: The total contribution margin for the quarter is $339,000, matching the provided answer.

类似问题

EA 4 - Contribution margin ratio equals... Enter your answer as a whole number.

When fixed costs increase and all other variables remain unchanged, the contribution margin will ________.

When making volume trade-off decisions managers should focus on which of the following?

HarvestCo can produce an additional 5,000 units using idle capacity. Variable cost per unit is $6. The special order price is $7.50. No additional fixed costs are incurred.What is the total contribution margin from the special order?

A café’s signature drink has a $6 selling price and $2.50 variable cost. Which statement is correct for contribution margin reasoning?

更多留学生实用工具

智能学习助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单