Question

Gabuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $ 141 Units in beginning inventory Units produced Units sold Units in ending inventory 2,500 2,080 420 Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense Fixed costs: Fixed manufacturing overhead Fixed selling and administrative expense 40 31 7 ta ta ta ta $50,000 $18,720 The total gross margin for the month under the absorption costing approach is:

Answer 1

Answer: $ 89,440

Calculation of Unit cost Under Absorption Costing Direct Material Direct Labour Variable Manufacturing Overhead Fixed Manufacturing Over head (50000/2500) Unit Product Cost 40.00 31.00 7.00 20.00 98.00 Absorption Costing Unit Product Cost 98.00 Income Statement Under Absorption Costing Sales (2080*141) Cost of Goods Sold (2080*98) Gross Margin 293280 203840 89440 (Answer)