Zippy company manufactured 10,000 units in December with a total product cost of $27,357 They had zero finished goods inventory at the start of December. In December Zippy sold 7,811 units at a unit price of $6.16. Period expenses were $3,521. What is the amount of Zippy's gross profit (otherwise know as gross margin).? Round any intermediate calculations to four decimal places.

Question

Business

Trevin Taylor

17 January, 07:28

Zippy company manufactured 10,000 units in December with a total product cost of $27,357 They had zero finished goods inventory at the start of December. In December Zippy sold 7,811 units at a unit price of $6.16. Period expenses were $3,521. What is the amount of Zippy's gross profit (otherwise know as gross margin).? Round any intermediate calculations to four decimal places.

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Nikolas Clay · Answer 1

Gross profit is $26,734.73

Explanation:

Cost per unit of production = $27,357/10,000

=$2.73

Cost of goods sold = Opening stocks + production - closing stock

Cost of goods sold = 0 + $27,357 - ($2.73 * (10,000-7,811))

= $ 21,381.03

Gross Profit = ($6.16*7,811) - $ 21,381.03

= $26,734.73

Gross margin = $26,734.73/$48,115.76 * 100% = 55.56%

This represents profit portion before removing operational expenses.