d. IS part or cost of goods sold. Use the following information to answer questi

Question

d. IS part or cost of goods sold. Use the following information to answer questions 4 through 7 A product is sold for $75 each with unit cost of direct materials $20, direct labor $15, variable manufacturing overhead $12, and fixed manufacturing overhead $10. The volume produced and sold is 6,000 units. Variable and fixed marketing and administrative costs are $4 and S3, respectively. 4. Which of the follorrect? Prime cost is $35. Conversion cost is $37 a. b. c. Inventoriable cost is $57 d. All of the above. 5. What is the amount of cost of goods sold? a. $342,000 b. $201,500 c. $364,000 d. None of the above. 6. Which of the following statements is correct? a. Operating profit is S66,000. b. Gross margin is $108,000. c. Contribution margin is $144,000. d. All of the above.

Explanation / Answer

4 The following statement is correct: d. All of the above is correct. Prime cost (20+15) 35 Conversion cost (15+12+10) 37 Inventoriable cost (20+15+12+10) 57 5 Cost of goods sold 342000 (6000*57) a. $342,000 6 The following statement is correct: d. All of the above is correct. Gross margin 108000 (75-57)*6000 Operating Profit 66000 108000-(4+3)*6000 Contribution margin 144000 (75-20-15-12-4)*6000 7 Full Absorption cost b. The same as Inventoriable costs.

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