Answer
Iron City incurred $230,000 in fixed manufacturing costs in 2014.
Work Step by Step
To calculate the fixed manufacturing costs, we can use the information provided in the question:
The profit under variable costing is given as \$438,000. The total contribution margin has been calculated as \$963,000. The difference between the two, which is \$525,000 (\$963,000 - \$438,000), represents the total fixed costs incurred by Iron City in 2014.
We know that the fixed marketing and administrative costs are \$295,000. Therefore, the remainder, which is \$230,000 (\$525,000 - \$295,000), is the fixed manufacturing costs for 2014.
