Question

March

Units produced and sold   14400

Total costs:

Direct labor 109440

Direct materials 132480

Variable overhead costs 86400

Factory rent 220000

Sales commissons   37440

Administrative salaries 129000

Use the information above for March. Units produced equals units sold, and there are no ending inventories of any kind.

1. Assume the units sell for $120 each. Compute the gross margin for March.

3. Assume the units sell for $120 each. Compute the contribution margin for March.  

Answer 1

1
	Sales Revenue		$1,728,000
	Cost of goods sold:
	Fixed costs	$220,000
	Variable costs	$328,320	$548,320
	Gross Profit (Gross Margin)		$1,179,680
	Operating Expenses:
	Fixed costs	$129,000
	Variable costs	$37,440	$166,440
	Operating Income		$1,013,240
3
	Sales Revenue		$1,728,000
	Less: Variable cost
	Direct materials	$132,480
	Direct labor	$109,440
	Variable overhead costs	$86,400
	Sales commissons	$37,440	$365,760
	Contribution margin		$1,362,240
	Less: Fixed cost
	Factory rent	$220,000
	Administrative salaries	$129,000	$349,000
	Operating Income		$1,013,240