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# Calculating gross margin and total direct manufacturing cost

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Highlight the items which are classified as fixed cost?
- Depreciation of assembly line facilities at ford
- Shipping costs from an Amazon distribution center
- The cost of hardware installed on sailboats
- Recurring advertising costs by a physician's office
- Wages paid to temporary personnel
- Insurance on factory assembly facility
- Commissions paid to Avon representatives.

Find the gross margin
Purchases - \$50,000
Freight in - \$15,000
Sales - \$155,000
Salaries - Sale staff - \$82,000
Property Taxes - Store -\$7,500
Insurance - Store - \$12,000
Merchandise Inventory, Year end - \$22,00

Find the total direct manufacturing cost
Advertising Expense \$ 10,000
General & Administrative Costs 9,000
Property Taxes on Factory 10,000
Insurance on Factory Building 2,400
Material used in Production 55,000
Production Labor 47,000
Quality Control Salary 8,000
Production Supervisor Salary 8,000

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#### Solution Preview

Fixed costs are those you have to pay whether you produce 10 or 1000 items:

Depreciation of assembly line facilities at Ford
Recurring advertising costs by a physician's office
Insurance on factory assembly facility

The remaining items will vary depending on varying factors:

Shipping costs from an Amazon distribution center depend on sales volume
The cost of hardware installed on sailboats depends on how many boats are made
Wages paid to temporary personnel usually when times are busy
Commissions paid to Avon representatives depend on sales

Find ...

#### Solution Summary

In the solution, the calculations are shown to answer the questions together with explanations.

\$2.19