Manufacturing margin less the sum of variable manufacturing overhead and variable selling and administrative expenses equals marginal income.

Question

Quizplus · Accepted Answer

Manufacturing margin is calculated by subtracting the cost of goods sold (which includes variable manufacturing costs) from sales revenue. Marginal income, often referred to as contribution margin, is calculated by subtracting all variable expenses (including variable manufacturing overhead and variable selling and administrative expenses) from sales revenue, not by subtracting these expenses from the manufacturing margin.

Manufacturing Margin Less the Sum of Variable Manufacturing Overhead and Variable