Accurate Metal Company sold 40,500 units of its product at a price of $420 per unit. Total variable cost per unit is $203, consisting of $196 in variable production cost and $7 in variable selling and administrative cost. Compute the manufacturing margin for the company under variable costing.

Instructions are below.

Explanation:

Giving the following information:

Accurate Metal Company sold 40,500 units of its product for $420 per unit. The total variable cost per unit is $203, consisting of $196 in variable production cost and $7 in variable selling and administrative cost.

Under the variable costing method, the unitary product cost includes direct material, direct labor, and variable overhead.

Sales= 40,500*420= 17,010,000

Variable cost= 196*40,500= (7,938,000)

Contribution margin= 9,072,000

Variable selling and administrative= (40,500*7)= (283,500)

Net operating income= 8,833,500

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