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Variable Costing Leone Company has the following information for February: Sales $600,000 Variable cost of goods...

Variable Costing

Leone Company has the following information for February:

Sales	$600,000
Variable cost of goods sold	288,000
Fixed manufacturing costs	90,000
Variable selling and administrative expenses	60,000
Fixed selling and administrative expenses	36,000

Determine the following for Leone Company for the month of February:

a. Manufacturing margin	$
b. Contribution margin	$
c. Operating income	$

Expert Solution

Leone sales is $600,000

$36,000 is the fixed selling and administrative expenses of Leone

Leone variable selling and administrative cost is $60,000

Variable portion of cost of goods sold of Leone is $288,000

Fixed manufacturing costs is $90,000 incurred

a Calculation of Leone manufacturing margin

Particulars	$
Sales	600,000
Less fixed manufacturing costs	90,000
Less Variable cost of goods sold	288,000
Manufacturing margin	222,000

$222,000 is the manufacturing margin of Leone Company

b computation of contribution margin of Leone company

Particulars	$
Sales	600,000
Less variable portion of cost of goods sold	288,000
Less variable selling and administrative expenses	60,000
Contribution margin of Leone	252,000

Leone company contribution margin is $252,000

3 Calculation of Leone company operating income

Particulars	$
Sales	600,000
Less variable selling and administrative expenses	60,000
Less fixed manufacturing cost	90,000
Less variable cost of goods sold	288,000
Less fixed selling and administrative expenses	36,000
Operating income	126,000

$126,000 is the operating income of Leone company

$222,000 is manufacturing margin, $252,000 is the operating margin and $126,000 operating income of Leone company. Manufacturing margin ($222,000) is also know as gross margin.

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ekkarill92 answered 2 years ago

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