Ch 5: Variable Costing (16 of 20) Q5.16 Eastern Distributors has a beginning balance of 800 units in inventory comprised of the following unit costs $32 $12 Direct materials: Direct labor: Variable manufacturing overhead: Fixed manufacturing overhead $9 $7 Production and sales information for the current year is as follows: 12,200 units produced (12,000 units sold) Direct materials purchased and used: $427,000 Direct labor incurred: $152,500 Variable manufacturing overhead: $122,000 Fixed manufacturing overhead: $85,400 Variable selling and administrative costs: $14 per unit sold Fixed selling and administrative costs: 525,000 Eastern sells its older inventory items first. Under full costing, what is gross margin if Eastern's selling price is $140 per unit? A $906,000 B $738,000 C $917,600 D $1,080,000