Answer:
Total gross margin= $75,480
Explanation:
Giving the following information:
Selling price $ 146
Units in beginning inventory 0
Units produced 2,470
Units sold 2,040
Variable costs per unit:
Direct materials $ 50
Direct labor $ 20
Variable manufacturing overhead $ 11
Fixed costs:
Fixed manufacturing overhead $ 69,160
<u>The absorption costing method includes all costs related to production, both fixed and variable.</u> The unit product cost is calculated using direct material, direct labor, and total unitary manufacturing overhead.
<u>First, we need to calculate the unitary production cost:</u>
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Unit product cost= direct material + direct labor + total unitary overhead
Unitary fixed overhead= 69,160 / 2,470= $28
Unit product cost= 50 + 20 + (11 + 28)= $109
<u>Now, the gross margin:</u>
Unitary Gross margin= selling price - Unit product cost
Unitary Gross margin= 146 - 109
Unitary Gross margin= $37
Total gross margin= 37*2,040
Total gross margin= $75,480
