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Query on December 2009 question 5 relevant costing: Stay Clean

This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.

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September 23, 2020 at 8:04 pm #586484
cutied32
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Note 3 seems to have an error: Material cost for DW is $70 and MW is $100
to deduct material cost from sales to get the contribution should have been:
(200-70)+(350-100)? and not what is printed. Please confirm.
September 24, 2020 at 9:08 am #586522
John Moffat
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There is no error.
Contribution is sales less variable costs. The saving in material costs is dealt with separately in note 5 of the answer. So note 3 is looking at the lost contribution ignoring materials.
So for DW this is 200 – 50 = $150 and for MW it is 350 80 = $270
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