Reference no: EM132853853

Problem - ABC produces and sells a decorative pillow for $75.00 per unit. In the first month of operation, 2,000 units were produced and 1,750 units were sold. Actual fixed costs are the same as the amount budgeted for the month. Other information for the month includes:

Variable manufacturing costs $20.00 per unit

Variable marketing costs $3.00 per unit

Fixed manufacturing costs $7.00 per unit

Administrative expenses, all fixed $15.00 per unit

Ending inventories:

Direct materials -0-

WIP -0-

Finished goods 250 units

Required -

1) What is cost of goods sold using variable costing?

A) $35,000

B) $40,000

C) $47,250

D) $54,000

2) What is contribution margin using variable costing?

A) $96,250

B) $91,000

C) $104,000

D) $110,000

3) What is operating income using variable costing?

A) $52,500

B) $78,750

C) $65,750

D) $47,000