Last Year, Walsh Company Manufactured 25,000 Units and Sold 22,000

question 71

Multiple Choice

Last year, Walsh Company manufactured 25,000 units and sold 22,000 units. Production costs were as follows:
$\begin{array}{|l|r|}\hline \text { Direct materials } & \$ 100,000 \\\hline \text { Direct labour } & 75,000 \\\hline \text { Variable manufacturing overhead } & 50,000 \\\hline \text { Fixed manufacturing overhead } & 75,000 \\\hline\end{array}$ Total sales were $440,000, total variable selling and administrative expenses were $110,000, and total fixed selling and administrative expenses were $45,000. There was no beginning inventory. Assume that direct labour is a variable cost.


-Under absorption costing,what was the gross margin?

• A) $21,000.
• B) $66,000.
• C) $176,000.
• D) $242,000.

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Definitions:

Collateral

Assets pledged by a borrower to secure a loan or guarantee repayment, which can be seized in case of default.

Creditor's Name

The name of an individual or entity to whom money is owed or who has provided credit to another party.

Debtor's Name

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Unsecured Creditor

A lender or creditor that extends credit without obtaining specific collateral, ranking below secured creditors in the event of a bankruptcy.