Explore BrainMass

Explore BrainMass

    Calculating gross margin and total direct manufacturing cost

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    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
    Advertising - $25,000
    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

    © BrainMass Inc. brainmass.com June 4, 2020, 1:09 am ad1c9bdddf
    https://brainmass.com/business/accounting/calculating-gross-margin-total-direct-manufacturing-cost-381685

    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

    ADVERTISEMENT