The Manager of the Manufacturing Division of Winnipeg Windows Does

question 32

Essay

The manager of the manufacturing division of Winnipeg Windows does not understand why gross margin went down in February when sales went up. Some of the information she has selected for evaluation include:
The division operated at normal capacity during January. Variable manufacturing cost per unit was $5, and the fixed manufacturing costs were $400,000. Selling and administrative expenses were all fixed.
Required:
Explain why the gross margin in February was lower than January even though February sales were higher. How would variable costing income statements help the manager understand the division's operating income?

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Definitions:

Uterus

A major female hormone-responsive reproductive sex organ of most mammals, including humans, responsible for housing and nurturing the fetus.

Myosarcoma

A malignant tumor derived from muscle tissue, often aggressive and requiring early treatment.

Choriocarcinoma

A fast-growing cancer that occurs in a woman's uterus (the womb), typically following a pregnancy or abortion and originates from cells that would have become the placenta.

Malignant

Describes cells or tumors that are cancerous and can spread to other parts of the body.