Answer:
GROSS MARGIN = 33.33%
Explanation:
PRODUCTION COST COMPONENTS
- Direct materials 14,000
- Direct work 19,000
- Lease and utilities 17,000
TOTAL PRODUCTION COST = 50,000
TOTAL UNITS PRODUCED = 5,000
UNIT COST= (Total Production Cost / Total Units Produced) = 50,000 / 5,000 = 10
FINAL GOODS INVENTORY = (Total Units Produced – Total Units Sales) = 5,000 – 3,000 = 2,000
FINAL GOODS INVENTORY AMOUNT = (Final goods Inventory * Unit Cost) = 2,000 * 10 = 20,000
SALES REVENUE= (Sold Units * Sale Price) = (3,000 * 15) = 45,000
COST OF SOLD GOODS (a) = (Sold Units * Unit Cost) = 3,000 * 10 = 30,000
COST OF SOLD GOODS (b) = (Beginning Balance + Production cost – Final Balance) = 0 + 50,000 – 20,000 = 30,000
GROSS MARGIN = ((Sales Revenue – Cost of sold Goods) / Sales Revenues) * 100 = ((45,000 – 30,000) / 45,000) * 100 = 33.33%
COST OF SOLD GOODS (a) Calculated according to the inventory unit cost
COST OF SOLD GOODS (b) Calculated as the difference in inventory
