Use the Information Below to Answer the Following Question(s)

question 9

Multiple Choice

Use the information below to answer the following question(s) .Samson Inc.expects to sell 10,000 barbells for $18.00 each.Direct materials costs are $5.00, direct manufacturing labour is $6.00, and manufacturing overhead is $2.50 per barbell.Each barbell requires 6 kilograms (kg) of material which is all added at the start of production.The units in work-in-process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs; the units in beginning inventory are completed before new units are started..Each barbell requires one-quarter hour of direct labour, and manufacturing overhead is allocated based on direct labour hours.Marketing costs are $2.00 per barbell.The following inventory levels are expected to apply to 2019:

-On the 2019 budgeted income statement, what amount will be reported for gross margin?

• A)$45,000
• B)$70,000
• C)$25,000
• D)$40,000
• E)$35,000

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Definitions:

Fixed Costs

Costs including rent, salaries, and insurance that stay the same regardless of production or sales amounts.

Variable Costs

Costs that fluctuate with the level of production or sales volume, such as materials and labor.

Fixed Costs

Expenses that do not change in total regardless of changes in the volume of goods or services produced or sold.

Operating Income

The profit realized from a business's ongoing operations, calculated before taxes and interest payments are deducted.