A company manufactured 50,000 units of a product at a cost of $450,000. They sold 40,000 units for $15 each. What is the gross margin?
A) $750,000
B) $240,000
C) $600,000
D) $450,000

Question

Quizplus · Accepted Answer

Gross margin can be calculated by subtracting the cost of goods sold (COGS) from the revenue. COGS can be calculated by dividing the total cost by the number of units produced, and then multiplying it by the number of units sold.

COGS = (450,000/50,000) * 40,000 = $360,000 
Revenue = 40,000 * $15 = $600,000 
Gross margin = Revenue - COGS = $600,000 - $360,000 = $240,000

Therefore, the correct answer is B.

A Company Manufactured 50,000 Units of a Product at a Cost