Final answer:
To calculate the total gross margin under absorption costing, total sales revenue of $383,640 is computed by multiplying units sold by selling price. Total COGS of $311,880 is determined by adding per-unit costs and multiplying by units sold. Finally, subtracting COGS from sales revenue yields a total gross margin of $71,760.
Step-by-step explanation:
The question concerns calculating the total gross margin for a manufacturing company under absorption costing based on the given data. Absorption costing is an accounting method that includes all manufacturing costs (direct materials, direct labor, variable manufacturing overhead, and fixed manufacturing overhead) in the cost of a product.
To calculate the total gross margin, we need to determine the total cost of goods sold (COGS) and subtract it from the total sales revenue. First, let's calculate the sales revenue:
Total Sales Revenue = Units Sold × Selling Price
= 2,760 units × $139
= $383,640
Now, let's calculate the total COGS:
Cost per Unit = Direct Materials + Direct Labor + Variable Manufacturing Overhead + Fixed Manufacturing Overhead Allocated per Unit
= $50 + $15 + $12 + ($107,640 ÷ 2,990 units produced)
= $77 + $36/unit (rounded to the nearest dollar)
Total COGS = Cost per Unit × Units Sold
= $113/unit × 2,760 units
= $311,880
Then, Total Gross Margin = Total Sales Revenue - Total COGS
= $383,640 - $311,880
= $71,760
The total gross margin for the month under absorption costing is $71,760.