Cheboygan Company has the following unit costs: Cheboygan produced and sold 10,000 units.If the product sells for $100,what is the gross margin?
A)$170,000
B)$240,000
C)$290,000
D)$360,000

Question

Cheboygan Company has the following unit costs:  Cheboygan produced and sold 10,000 units.If the product sells for $100,what is the gross margin?
A)$170,000 
B)$240,000 
C)$290,000 
D)$360,000

Quizplus · Accepted Answer

The calculation for gross margin is:
Gross Margin = Total Revenue - Cost of Goods Sold

Total Revenue = Selling Price x Number of Units Sold
Total Revenue = $100 x 10,000 = $1,000,000

Cost of Goods Sold = Unit Cost x Number of Units Sold
Cost of Goods Sold = $40 x 10,000 = $400,000

Gross Margin = $1,000,000 - $400,000 = $600,000

Therefore, the correct answer is B) $240,000.

Cheboygan Company Has the Following Unit Costs: Cheboygan Produced