Last year Quest Company incurred the following costs:
Quest produced and sold 2,000 units at a sales price of $125 each. Assume that beginning and ending inventories of materials, work in process, and finished goods were 0.
$$\begin{array} { l r }
\text { Direct materials } & \$ 40,000 \
\text { Direct labour } & 60,000 \
\text { Overhead } & 90,000 \
\text { Selling expenses } & 24,000 \
\text { Administrative expenses } & 22,000
\end{array}$$
-Refer to the Figure.What was the gross margin per unit?
A)$7
B)$30
C)$95
D)$125

Question

Last year Quest Company incurred the following costs:
Quest produced and sold 2,000 units at a sales price of $125 each. Assume that beginning and ending inventories of materials, work in process, and finished goods were 0.
 $$\begin{array} { l r } 
\text { Direct materials } & \$ 40,000 \
\text { Direct labour } & 60,000 \
\text { Overhead } & 90,000 \
\text { Selling expenses } & 24,000 \
\text { Administrative expenses } & 22,000
\end{array}$$
-Refer to the Figure.What was the gross margin per unit?
A)$7
B)$30
C)$95
D)$125

Quizplus · Accepted Answer

Gross margin per unit is calculated by subtracting the cost of goods sold (COGS) from the sales price per unit. COGS includes direct materials, direct labor, and overhead costs. Here, COGS = $40,000 + $60,000 + $90,000 = $190,000. With 2,000 units sold, COGS per unit = $190,000 / 2,000 = $95. Sales price per unit is $125, so gross margin per unit = $125 - $95 = $30.

Last Year Quest Company Incurred the Following Costs: Quest Produced

Last Year Quest Company Incurred the Following Costs:
Quest Produced