10. Red Company has no beginning and ending inventories, and reports the following data about its only product:

Direct materials used $500,000 Direct labor $150,000 Fixed indirect manufacturing $100,000 Fixed selling and administrative $200,000 Variable indirect manufacturing $50,000 Variable selling and administrative $90,000 Selling price(per unit) $80

Units produced and sold 15,000

Red Company uses the absorption approach to prepare the income statement. What is the gross margin? A) $0 B) $110,000 C) $400,000 D) $500,000

11. Purple Company has no beginning and ending inventories, and reports the following data about its only product:

Direct materials used $550,000 Direct labor $225,000 Fixed indirect manufacturing $200,000 Fixed selling and administrative $75,000 Variable indirect manufacturing $100,000 Variable selling and administrative $50,000 Selling price(per unit) $75

Units produced and sold 20,000

Purple Company uses the contribution approach to prepare the income statement. What is the contribution margin income? A) $350,000 B) $500,000 C) $575,000 D) $650,000