Philadelphia Company has the following information for March: Sales $450,000 Variable cost of goods sold 240,000 Fixed manufacturing costs 70,000 Variable selling and administrative expenses 52,000 Fixed selling and administrating expenses 35,000 Determine the March: a. Manufacturing margin $ b. Contribution margin $ c. Operating income for Philadelphia Company

Manufacturing margin = $210,000

Contribution margin = $158,000

Operating income = $53,000

Explanation:

Requirement 1

We know,

Manufacturing margin = Sales revenue - Cost of goods sold

given,

Sales revenue = $450,000

Cost of goods sold = $240,000

Putting the values into the formula, we can get

Manufacturing margin = Sales revenue - Cost of goods sold

Manufacturing margin = $450,000 - $240,000

Manufacturing margin = $210,000

Manufacturing margin also called gross margin.

Requirement 2

Contribution margin = Sales revenue - Variable expense

Given,

Sales revenue = $450,000

Variable expense = Variable cost of goods sold + Variable selling and administrative expenses

Given,

Variable cost of goods sold = $240,000

Variable selling and administrative expenses = $52,000

Putting the values into the formula, we can get

Variable expense = $240,000 + $52,000

Or, Variable expense = $292,000

Therefore,

Contribution margin = $450,000 - $292,000

Contribution margin = $158,000

Requirement 3

Operating income = Contribution margin - Fixed expense

Given,

Contribution margin = $158,000 (From requirement 2)

Fixed expense = Fixed manufacturing costs + Fixed selling and administrating expenses.

Fixed expense = $70,000 + $35,000

Fixed expense = $105,000

Putting the values into the formula, we can get

Operating income = Contribution margin - Fixed expense

Operating income = $158,000 - $105,000

Operating income = $53,000

answercountries with higher real income per capita tend to have higher levels of this index.