Gabbert Company, Which Has Only One Product, Has Provided the Following

question 113

Multiple Choice

Gabbert Company, which has only one product, has provided the following data concerning its most recent month of operations:
$\begin{array}{|l|r|}\hline \text { Selling price } & \$ 90 \\\hline \text { Units in beginning inventory } & 0 \\\hline \text { Units produced } & 3,600 \\\hline \text { Units sold } & 3,400 \\\hline \text { Units in ending inventory } & 200 \\\hline \text { Variable costs per unit: } & \\\hline \text { Direct materials } & \$ 23 \\\hline \text { Direct labour } & \$ 11 \\\hline \text { Variable manufacturing overhead } & \$ 2 \\\hline \text { Variable selling and administrative } & \$ 8 \\\hline \text { Fixed costs: } & \\\hline \text { Fixed manufacturing overhead } & \$ 93,600 \\\hline \text { Fixed selling and administrative } & \$ 61,200 \\\hline\end{array}$

-What was the total gross margin for the month under the absorption costing approach?

• A) $90,000.
• B) $95,200.
• C) $125,800.
• D) $156,400.

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Definitions:

Specialization

Division of productive activities so that no one is self-sufficient.

Self-Sufficient

The ability of an individual, household, or nation to meet all their needs without external assistance or trade.

Standard of Living

A measure of the wealth, comfort, material goods, and necessities available to a certain socioeconomic class or geographic area.

Importing

The process of importing products or services from other countries for the purpose of selling them domestically.