Question

March Units produced and sold   14400 Total costs: Direct labor 109440 Direct materials 132480 Variable overhead...

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.  

Business   Accounting   
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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
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