Chapter 2, Problem 16MCQ

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

Chapter
Section

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
1 views

Use the following information for Multiple- Choice Questions 2-13 through 2-18:Last year, Barnard Company incurred the following costs:Barnard produced and sold 10,000 units at a price of $31 each.2-16 Refer to the information for Barnard Company on the previous page. The gross margin per unit is a.$24.00. b. $11.00. c.$16.00. d. $26.00. e.$3.40.

To determine

Identify the amount of per unit gross margin.

Explanation

Gross Margin Per Unit:

Gross margin per unit can be computed by dividing the gross margin by the number of units produced and sold. Gross margin can be defined as the difference between the sales revenue and COGS (cost of goods sold).

b.

Use the following formula to calculate the gross margin per unit:

Gross margin per unit=Gross marginNumber of units produced and sold

Substitute $110,000 for gross margin and 10,000 units for a number of units produced and sold in the above formula. Gross margin per unit=$110,00010,000units=$11 The amount of gross margin per unit is$11. Therefore, this option is correct.

Working Notes:

1.

Calculation of sales revenue:

Sales revenue=Units produced and sold×Selling price per unit=10,000units×$31=$310,000

Hence, the amount of sales revenue is \$310,000.

2

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