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Gabe's Auto produces and sells an auto part for $30.00 per unit. In 2020, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes: Direct materials $12.00 per unit Direct manufacturing labour $2.25 per unit Variable manufacturing costs $0.75 per unit Sales commissions $3.00 per part Fixed manufacturing costs $375,000 per year Administrative expenses, all fixed $135,000 per year REQUIRED: Determine the Gross Margin(Profit) that would be reported using Absorption Costing.

Gabe's Auto produces and sells an auto part for $30.00 per unit. In 2020, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes: Direct materials $12.00 per unit Direct manufacturing labour $2.25 per unit Variable manufacturing costs $0.75 per unit Sales commissions $3.00 per part Fixed manufacturing costs $375,000 per year Administrative expenses, all fixed $135,000 per year REQUIRED: Determine the Gross Margin(Profit) that would be reported using Absorption Costing.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Gabe's Auto produces and sells an auto part for $30.00 per unit. In 2020, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes: Direct materials $12.00 per unit Direct manufacturing labour $2.25 per unit Variable manufacturing costs $0.75 per unit Sales commissions $3.00 per part Fixed manufacturing costs $375,000 per year Administrative expenses, all fixed $135,000 per year REQUIRED: Determine the Gross Margin(Profit) that would be reported using Absorption Costing.
Transcribed Image Text:Gabe's Auto produces and sells an auto part for $30.00 per unit. In 2020, 100,000 parts were produced and 75,000 units were sold. Other information for the year includes: Direct materials $12.00 per unit Direct manufacturing labour $2.25 per unit Variable manufacturing costs $0.75 per unit Sales commissions $3.00 per part Fixed manufacturing costs $375,000 per year Administrative expenses, all fixed $135,000 per year REQUIRED: Determine the Gross Margin(Profit) that would be reported using Absorption Costing.
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