The quarterly operating statement for a firm gives the following information: Number of pieces manufactured: 100
Number of pieces sold: 100
Total cost of goods sold: $800
Average cost of single piece: $5
Net sales: $1,000
It can be inferred that the firm's gross margin is _____.
A) $92
B) $2
C) $1800
D) $200
E) $1818

Question

Quizplus · Accepted Answer

Gross Margin = Net Sales - Cost of Goods Sold
Cost of Goods Sold = Number of Pieces Sold x Average Cost of Single Piece = 100 x $5 = $500

Therefore, Gross Margin = $1,000 - $500 = $500
But, we need to find the Gross Margin for a single piece,
Gross Margin per piece = Gross Margin / Number of Pieces sold
= $500/100
= $5

Therefore, the Gross Margin per piece is $5, which is same as the average cost of single piece of the firm. So, the answer is D) $200.

The Quarterly Operating Statement for a Firm Gives the Following