manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: Selling price $ 138 Units in beginning inventory 0 Units produced 2,950 Units sold 2,550 Units in ending inventory 400 Variable costs per unit: Direct materials $ 42 Direct labor $ 15 Variable manufacturing overhead $ 14 Variable selling and administrative expense $ 17 Fixed costs: Fixed manufacturing overhead $ 103,250 Fixed selling and administrative expense $ 20,400 The total gross margin for the month under absorption costing is:

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andromache andromache · Answer 1 · 2020-04-21T05:04:06+02:00

Answer:

$81,600

Explanation:

The computation of the total gross margin for the month under absorption costing is shown below:

As we know that

Gross profit = Sales - cost of goods sold

where,

Sales = Selling price × number of units sold

= $138 × 2,550 units

= $351,900

And, the cost of goods sold is

= Direct material per unit + direct labor per unit + Variable manufacturing overhead per unit + Fixed manufacturing overhead per unit

= $42 + $15 + $14 + $103,250 ÷ 2,950 units

= $42 + $15 + $14 + $35

= $106

So total amount of cost of goods sold is

= $106 × 2,550 units

= $270,300

So, the gross profit is

= $351,900 - $270,300

= $81,600