Aaker Corporation, which has only one product, has provided the following data concerning its most recent month of operations: The total gross margin for the month under the absorption costing approach is:
A)$98, 100
B)$198, 000
C)$72, 000
D)$12, 000

Question

Aaker Corporation, which has only one product, has provided the following data concerning its most recent month of operations:  The total gross margin for the month under the absorption costing approach is:
A)$98, 100 
B)$198, 000 
C)$72, 000 
D)$12, 000

Quizplus · Accepted Answer

Under the absorption costing approach, the total gross margin is calculated as sales minus cost of goods sold. Using the given data, the cost of goods sold is calculated as:

Beginning inventory + Cost of goods manufactured - Ending inventory
= $40,000 + $580,000 - $52,100
= $567,900

And, sales are given as $640,000.

Therefore, the total gross margin is: 
$640,000 - $567,900 = $72,100

Hence, the correct answer is option C, $72,000 (rounded to the nearest thousand).

Aaker Corporation, Which Has Only One Product, Has Provided the Following