Question

The following information pertains to Flaxman Manufacturing Company for March 2018. Assume actual overhead equaled applied overhead. March 1 Inventory balances Raw materials $ 100,000 Work in process 120,000 Finished goods 78,000 March 31 Inventory balances Raw materials $ 60,000 Work in process 145,000 Finished goods 80,000 During March Costs of raw materials purchased $ 120,000 Costs of direct labor 100,000 Costs of manufacturing overhead 63,000 Sales revenues 380,000Calculate the amount of gross margin on the income statement.

Answer 1

Answer:

Gross Margin            84,000  

Explanation:

Flaxman Manufacturing Company

Income Statement for March 2018

Sales revenues 380,000

March 1 Inventory balance Raw materials $ 100,000

Add Raw Materials Purchased $ 120,000

Less March 31 Inventory balance Raw materials $ 60,000

Raw Materials Used 160,000

Costs of direct labor 100,000

Costs of manufacturing overhead 63,000

Total Manufacturing Costs 323,000

Add Work in process 120,000

Cost Of Goods Available for Manufacturing 443,000

Less Ending Work in process 145,000

Cost of Goods Manufactured 298,000

Add Finished goods 78,000

Cost of Goods Available for Sale 376,000

Less Ending Finished goods 80,000

Cost of Goods Sold 296,000

Gross Margin            84,000      

By subtracting Cost of Good Sold from Sales Revenue we get Gross Margin.

The cost of goods sold is calculated as shown above.