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19 August, 22:31

The following information pertains to Flaxman Manufacturing Company for March 2018. Assume actual overhead equaled applied overhead. March 1 Inventory balances Raw materials $ 100,000 Work in process 120,000 Finished goods 78,000 March 31 Inventory balances Raw materials $ 60,000 Work in process 145,000 Finished goods 80,000 During March Costs of raw materials purchased $ 120,000 Costs of direct labor 100,000 Costs of manufacturing overhead 63,000 Sales revenues 380,000Calculate the amount of gross margin on the income statement.

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  1. 20 August, 01:32
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    Gross Margin 84,000

    Explanation:

    Flaxman Manufacturing Company

    Income Statement for March 2018

    Sales revenues 380,000

    March 1 Inventory balance Raw materials $ 100,000

    Add Raw Materials Purchased $ 120,000

    Less March 31 Inventory balance Raw materials $ 60,000

    Raw Materials Used 160,000

    Costs of direct labor 100,000

    Costs of manufacturing overhead 63,000

    Total Manufacturing Costs 323,000

    Add Work in process 120,000

    Cost Of Goods Available for Manufacturing 443,000

    Less Ending Work in process 145,000

    Cost of Goods Manufactured 298,000

    Add Finished goods 78,000

    Cost of Goods Available for Sale 376,000

    Less Ending Finished goods 80,000

    Cost of Goods Sold 296,000

    Gross Margin 84,000

    By subtracting Cost of Good Sold from Sales Revenue we get Gross Margin.

    The cost of goods sold is calculated as shown above.
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