Jean Peck's Furniture manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $500 after negotiations. In the month of January, it manufactures 3,100 tables and sells 2,700 tables. Actual fixed costs are the same as the amount of fixed costs budgeted for the month.
The following information is provided for the month of January:

At the end of the month Jean Peck's Furniture has an ending inventory of finished goods of 400 units. The company also incurs a sales commission of $13 per unit.
What is the gross margin when using absorption costing? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Question

Jean Peck's Furniture manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $500 after negotiations. In the month of January, it manufactures 3,100 tables and sells 2,700 tables. Actual fixed costs are the same as the amount of fixed costs budgeted for the month.
The following information is provided for the month of January:

At the end of the month Jean Peck's Furniture has an ending inventory of finished goods of 400 units. The company also incurs a sales commission of $13 per unit.
What is the gross margin when using absorption costing? (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Quizplus · Accepted Answer

Total sales: $500 x 2,700 units = $1,350,000
Total cost of goods sold: ($130 + ($105,000/ 3,100units) ) x 2,700 units = $442,449
Gross margin under absorption costing: $1,350,000 - $442,449 = $907,551

Jean Peck's Furniture Manufactures Tables for Hospitality Sector