DC and Marvel would like to evaluate one of the product lines that they sell to defense department. Every month the Stark and Company produce an identical number of units, although the sales in units differ from month to month.
Selling price
$111
109
Units in beginning inventory
400
360
Units produced
8,800
6900
Units sold
8,900
7200
Variable costs per unit:
Direct materials
$34
29
Direct labour
$37
31
Variable manufacturing overhead
$3
2
Variable selling and administrative
$9
7
Fixed costs:
Fixed manufacturing overhead
$61,600
53,500
Fixed selling and administrative
$169,100
145,000
Required:
1) Compute the total Contribution Margin.
2) Compute the Operating Income under Variable Costing.
3) Prepare a reconciliation from your Variable Costing Operating Income to compute Operating Income under absorption costing.
