Absorption and Variable Costing Problem

The first month of operations ended Nov 30, 2016. Flexo Company produced 47,200

hammers of which 39,800 were sold. Operating data for the month are as follows:

Sales: $325,000

Manufacturing costs:

Direct materials: $90,000

Direct labor: $28,000

Variable manufacturing costs: $15,500

Fixed manufacturing costs: $11,000

=$144,500

Selling and administrative expenses:

Variable: $19,000

Fixed: $11,000

=$30,000

1. How much is the Gross Profit (Gross Margin) under the absorption costing method?

2. How much is the Net Income under the absorption costing method?

3. How much is the Contribution Margin under the variable costing method?

4. How much is the Net Income under the variable costing method?