Question

4).Sales is $100 per unit; direct material is $25 per unit; direct labor is $15 per unit, overhead is $10 per unit and $20,000 per month; selling and administrative expenses are $5 per unit and $10,000 per month. The company produced 900 units. Gross margin equals:

a).$25,000 b).$40,500 c).$90,000 d).$10,500

5).Sales is $100 per unit; direct material is $25 per unit; direct labor is $15 per unit, overhead is $10 per unit and $20,000 per month; selling and administrative expenses are $5 per unit and $10,000 per month. The company produced 900 units. Net income equals:

a).$10,500 b).$40,500 c).$90,000 d).$25,000

6).Sales is $120 per unit; direct material is $21 per unit; direct labor is $9 per unit, overhead is $6 per unit and $9,000 per month; selling and administrative expenses are $12 per unit and $18,000 per month. The company produced 1,000 units. Total period costs are:

a).$30,000 b).$18,000 c).$45,000 d).$36,000

Answer 1

Question 4

Correct answer----------(a) $25,000

Question 5

Correct answer----------(a) $10,500

Working for Question 4 and 5

	Per unit	Units	Total
Sales revenue	$        100.00	900	$          90,000.00
Cost of goods sold
Direct material	$          25.00	900	$          22,500.00
Direct labor	$          15.00	900	$          13,500.00
Variable Overhead	$          10.00	900	$            9,000.00
Fixed overhead	$          22.22	900	$          20,000.00
Total cost of goods sold		900	$          65,000.00
Gross margin			$          25,000.00
Less : Variable selling and administrative expense	$            5.00	900	$            4,500.00
Less : Fixed selling and administrative expense			$          10,000.00
Net income			$          10,500.00

Question 6

Correct answer----------(a) $30,000

Working

	Per unit	Units	Total
Less : Variable selling and administrative expense	$          12.00	1000	$          12,000.00
Less : Fixed selling and administrative expense			$          18,000.00
Total period cost			30,000.00

All General, administrative and selling costs are period costs.