Bates Manufacturing uses a job order cost system, and overhead is applied on the basis of direct labor hours. At the beginning of the period, the company estimated that overhead would be $64,000 and 10,000 direct labor hours would be worked. Two projects were started and completed in the current accounting period. The following transactions were completed during the period: (a) Used $10,000 of direct material on Project I and $6,800 of direct material on Project II. (b) Labor costs for the two jobs amounted to the following: Project I, $24,000 (2,000 hours); Project II, $44,000 (6,000 hours). (c) Project II was sold during the period for $120,000. The company's gross margin for the period was (Do not round your intermediate calculation):

A. $30,800.

B. $89,200.

C. $69,200.

D. $18,000

2. Lewes Company produced 8,000 units of inventory and sold 6,000. The company incurred the following production costs: Variable manufacturing cost: $12.00 per unit Fixed manufacturing overhead cost: $60,000 Assuming the company sells its product at a price of $25 per unit, and incurred $10,000 in selling and administrative cost, what is the amount of net income under variable costing?

A. $8,000

B. $23,000

C. $68,000

D. $107,000

3. Herald Company paid $2,800 cash for production supplies. The recognition of this event will:

A. decrease equity.

B. not impact total assets.

C. increase expenses.

D. None of these.