Question
Brooks Bikes is operating at 50% of capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the
Brooks Bikes is operating at 50% of capacity. It uses a job-order costing system with a plantwide predetermined overhead rate based on machine-hours. At the beginning of the year, the company made the following estimates: Machine-hours required to support estimated production 165,000 Fixed manufacturing overhead cost $ 1,980,000 Variable manufacturing overhead cost per machine-hour $ 2.00 During the year, bike ABC was started, completed, and sold for $2,500. The following information was available with respect to this bike: Direct materials $ 1,150 Direct labor cost $ 830 Machine-hours used 72 What gross margin did Brooks Bikes earn on the sale of bike ABC?
a. -448
b. -488
c. 488
d. 448
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