{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

AC 505 Week 7 discution

# AC 505 Week 7 discution - Q1 Gross Margin is the difference...

This preview shows pages 1–3. Sign up to view the full content.

Q1. Gross Margin is the difference between gross sales and the cost of goods sold. The hard part is figuring out the Cost Of Goods Sold (CGS). We need to figure out two other things before we can figure out CGS. First we have to calculate Direct Materials Used. Direct Materials on hand: \$6,000 + Direct Materials Purchased: \$7,000 - Ending Direct Materials Inventory: \$1,000 = \$12,000 Next, we have to figure out the Cost of Goods Manufactured (CGM). Direct Materials Used: \$12,000 + Direct Labor: \$5,000 + Indirect Labor: \$600 + Indirect Materials: \$500 + Utilities: \$1,900 + Equipment Depreciation: \$3,500 + Begin WIP Inventory: \$800 - End WIP Inventory: \$3,000 = \$21,300 Now we can calculate CGS. Beginning Finished Goods Inventory: \$4,000 + CGM: \$21,300 - Ending Finished Goods Inventory: \$5,300 = \$20,000 Almost there. Gross Margin is Sales less CGS. Sales: \$31,800 - CGS: \$20,000 = \$11,800 Simple, huh? Now, just for fun, let's plot some satellite orbits... ;-) By the way, the accounts payable figures appear to be just noise like we've seen in other examples.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Question#2 Which costs will change with a decrease in activity within the relevant range? The answer is B and on page 51 of the text gives a good definition of the two items: 'In total variable cost increases and decreases in proportion to changes in activity level.' 'Per unit fixed cost per unit decreases as the activity level rises and increase as the activity level falls.' Question# 3 an increase in the activity level within the relevant range results in a decrease in fixed cost per unit. This is found on page 51 of the text. Managerial Accounting,Garrison,Noreen, Brewer 13th ed. Question # 3 an increase in the activity level within the revevant range results in: D because the more you make the more the cost gets spead out to each unit?
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 8

AC 505 Week 7 discution - Q1 Gross Margin is the difference...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online