Lawson Manufacturing Company paid production workers wages of $100,000. It incur

Question

Lawson Manufacturing Company paid production workers wages of $100,000. It incurred material costs of $120,000 and manufacturing overhead costs of $160,000. Selling and general administrative salaries were $80,000. Lawson started and completed 1000 units of product and sold 800 of these units. The Company sets sales price at $220 above the average per-unit production cost. Based on the information alone, determine the amount of gross margin and net income? What is Lawson’s pricing strategy called? (6 points)

Explanation / Answer

Calculate average production cost per unit :

Sale price per unit = 380+220 = $600 per unit

Calculate amount of gross margin and net income :

Lawson's pricing strategy called Cost plus pricing method.

Direct material 120000 Direct labour 100000 Manufacturing overhead 160000 Total production cost 380000 Units 1000 Production cost per unit 380

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