Abe Company, which has only one product, has provided the following data concern

Question

Abe Company, which has only one product, has provided the following data concerning its most recent month of operations: Selling price $126 Units in beginning inventory 0 Units produced 8,700 Units sold 8,400 Units in ending inventory 300 Variable costs per unit: Direct materials $30 Direct labor $48 Variable manufacturing overhead $3 Variable selling and administrative $7 Fixed costs: Fixed manufacturing overhead $ 156,600 Fixed selling and administrative $151,200 The total gross margin for the month under the absorption costing approach is: $319,200 $16,800 $226,800 $256,500

Explanation / Answer

Absorption costing: Direct materials $30 Direct labor 48 Variable manufacturing overhead 3 Fixed manufacturing overhead =156600/8700 = 18 Unit product cost $99 Absorption costing income statement Sales 8400*126 = $1058400 Cost of goods sold: Beginning inventory $0 Add cost of goods manufactured

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