The Following Is a Summarized Income Statement for McClaron Manor

question 113

Multiple Choice

The following is a summarized income statement for McClaron Manor Co.'s profit center 12608 for April:
$\begin{array}{l}\text { Contribution Margin }&&\$175,000\\\text { Period Expenses } & \$ 11,000\\\text { Manager' s Salary } & \$ 2,000 \\\text { Corporate Expense Allocation } & \$ 8,000&\$(21,000) \\\text { Net Income }&&\$154,000\end{array}$
Which of the following amounts is most likely subject to the control of the profit center's manager? (CPA, adapted)

• A) Contribution Margin of $175,000.
• B) Contribution Margin of $175,000 and Period Expenses of $11,000.
• C) Contribution Margin of $175,000 and Period Expenses of $13,000.
• D) Contribution Margin of $175,000 and Period Expenses of $21,000.

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Definitions:

Product Cost

The total cost of manufacturing or purchasing a product, including raw materials, labor, and overhead expenses.

Per Unit

A term referring to expressing or measuring amounts for each single item or instance.

Variable Costing

A pricing strategy that incorporates only variable manufacturing expenses such as direct materials, direct labor, and variable factory overhead into the cost of products.

Absorption Costing

A method of cost calculation that takes into account all expenses related to manufacturing, such as direct materials, direct labor, and all overheads, whether fixed or variable, in determining a product's cost.