The Gasson Company Sells Three Products, Product A, Product B

question 53

Multiple Choice

The Gasson Company sells three products, Product A, Product B and Product C, and had sales of £1,000,000 during the month of June. The company's overall contribution margin ratio was 37% and fixed expenses totaled £350,000. Sales were: Product A, £500,000; Product B, £300,000; and Product C, £200,000. Traceable fixed costs were: Product A, £120,000; Product B, £100,000; and Product C, £60,000. The variable expenses of Product A were £300,000 and the variable expenses of Product B were £180,000.
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The product line segment margin for Product A for June was

• A)£200,000.
• B)£80,000.
• C)£65,000.
• D)£10,000.

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Definitions:

Gross Margin

The difference between sales revenue and the cost of goods sold, representing the profit before deducting operating expenses.

Accounts Receivable Turnover

A financial metric indicating how many times a business collects its average accounts receivable during a period, reflecting credit sales efficiency.

Average Collection Period

The average number of days it takes for a company to receive payment from its customers for invoices issued.

Inventory Turnover

A measure of how often a company sells and replaces its stock of goods within a certain period.