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Inessa05 [86]
3 years ago
13

A manufacturing company that produces a single product has provided the following data concerning its most recent month of opera

tions: Selling price $ 146 Units in beginning inventory 0 Units produced 2,470 Units sold 2,040 Units in ending inventory 430 Variable costs per unit: Direct materials $ 50 Direct labor $ 20 Variable manufacturing overhead $ 11 Variable selling and administrative expense $ 19 Fixed costs: Fixed manufacturing overhead $ 69,160 Fixed selling and administrative expense $ 20,400 The total gross margin for the month under absorption costing is:
Business
1 answer:
strojnjashka [21]3 years ago
4 0

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>

<u></u>

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

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