Gabuat Corporation, which has only one product, has provided the following data concerning its most recent month of operations:

Selling price $147
Units in beginning inventory 0
Units produced 2,200
Units sold 1,910
Units in ending inventory 290

Variable costs per unit:

Direct materials $47
Direct labor $34
Variable manufacturing overhead $5
Variable selling and administrative expense $6

Fixed costs:
Fixed manufacturing overhead $39,600
Fixed selling and administrative expense $15,280

The total gross margin for the month under the absorption costing approach is:________

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andromache andromache · Answer 1 · 2021-01-09T01:32:01+01:00

Answer:

Gross Margin $82,130

Explanation:

The computation of the gross margin under the absorption costing approach is as follows:

Sales ($147 × 1,910 units) $280,770

Less:

Direct Material ($47 × 1,910 units) $89,770

Direct Material ($34 x 1,910 units) $64,940

Variable Manufacturing Overhead ($5 × 1,910 units) $9,550

Fixed Manufacturing Overhead ($39,600 ÷ 2,200 units) × $1,910 units $34,380

Gross Margin $82,130