Patrick Company Makes Three Types of Products What Is the Gross Profit Margin for All Three Products

question 46

Multiple Choice

Patrick Company makes three types of products.The company has two types of customers.The cost to serve all customers is $12,000 and is allocated to customer types based on the number of manager visits to customer locations.The following data are available:
$\begin{array}{llll}&\text { product } 1&\text { product } 2&\text { product } 3\\\text { Sales } & \$ 5,000 & \$ 6,000 & \$ 30,000 \\\text { Cost of goods sold } & \underline{4,000} & \underline{4,800} & \underline{15,000} \\\text { Gross margin }&\$1,000&\$1,200&\$15,000\end{array}$
$\begin{array}{lll}&\text { Customer type 1 }&\text { Customer type 2 }\\\text { Product 1 Sales } & \$ 500 & \$ 4,500 \\\text { Product 2 Sales } & \$ 1,000 & \$ 5,000 \\\text { Product 3 Sales } & \$ 16,000 & \$ 14,000 \\\text { Manager visits } & 4 & 16\end{array}$
What is the gross profit margin for all three products for Customer Type 2?

• A) $450
• B) $1,000
• C) $7,000
• D) $8,900

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