Question

The following information pertains to Flaxman Manufacturing Company for March 2018. Assume actual overhead equaled applied overhead. March 1 Inventory balances Raw materials $ 124,500 Work in process 118,800 Finished goods 76,300 March 31 Inventory balances Raw materials $ 85,400 Work in process 145,400 Finished goods 80,100 During March Costs of raw materials purchased $ 118,400 Costs of direct labor 100,800 Costs of manufacturing overhead 61,800 Sales revenues 359,000

Calculate the amount of gross margin on the income statement.

Answer 1

Gross Profit $ 69,300

Step-by-step explanation:

Flaxman Manufacturing Company

Income Statement

Sales revenues 359,000

March 1 Opening Inventory Raw materials $ 124,500

Add Costs of raw materials purchased $ 118,400

Less March 31 Ending Inventory Raw materials $ 85,400

Cost of Materials Used 157,500

Add Costs of direct labor 100,800

Add Costs of manufacturing overhead 61,800

Total Manufacturing Costs 320,100

Add March 1 Opening Work in process 118,800

Cost of Goods Available for Manufacture 438,900

Less March 31 Ending Work in process 145,400

Cost of Goods Manufactured 293,500

Add March 1 Opening Finished goods 76,300

Cost of Goods Available for Sale 369,800

Less March 31 Ending Finished goods 80,100

Cost of Goods Sold (289,700)

Gross Profit 69,300

Gross Margin is also known as gross profit. It is the income before the operating expenses and is obtained by subtracting Cost Of Goods Sold from Sales.We obtain the COGS by doing the above operations.