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?
Definitions:
Metabolism
The biochemical processes that occur within a living organism to maintain life, involving the production and use of energy.
Organization
The arrangement of elements and resources in a structured and coordinated manner to achieve desired objectives.
Reproduction
The biological process by which new individual organisms are produced from their parents.
Growth
The process of increasing in size, a vital process of living organisms and cells.
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