Question

Lincoln, Inc., which uses a volume-based cost system, produces cat condos that sell for $120 each....

Lincoln, Inc., which uses a volume-based cost system, produces cat condos that sell for $120 each. Direct materials cost $18 per unit, and direct labor costs $17 per unit. Manufacturing overhead is applied at a rate of 225% of direct labor cost. Nonmanufacturing costs are $29 per unit. What is the gross profit margin for the cat condos? (Round your intermediate calculations to nearest whole dollar.) Multiple Choice

39.2%

15.0%

85.0%

67.5%

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Answer #1

Correct answer--------39.2%

Working

Sales price $   120.00
Cost of units sold
Direct material $     18.00
Direct labor $     17.00
Manufacturing overhead $     38.00
Total cost $     73.00
Gross profit per unit $     47.00
Gross profit ratio 39.2%

Non manufacturing cost is not inventory cost it is only a period cost that will be charged as an operating cost.

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