Cost and production data for Binghamton Beverages Inc. are present as follows: Standard Cost Summary Mixing Blending Total Materials: --4 lbs @ $.50 --1 gal @ $ 1.00 Labor: -- 1 hr @ $ 8.00 -- 1 hr @ $ 10.00 Factory Overhead: --Per unit Totals $ 11 $ 13 $ 24 Production Report Mixing Blending Beginning units in process None None Units finished and transferred 6,000 5,000 1,000 Ending units in process (50% complete) 2,000 Actual Cost Data Mixing Blending Direct Material: 30,000 lbs @ $.52 $ 15,600 5,500 gals @ $.95 $ 5,225 Direct Labor: 6,800 hrs @ $ 8.00 54,400 5,500 hrs @ $ 10.20 57,120 Factory Overhead: Indirect materials $ 500 $1,000 Indirect labor 2,000 5,000 Other 4,500 5,000 Total Cost $77,000 $ 73,345 4) Assume that 4,000 units were sold at $ 40 each. a) Calculate the gross margin based on standard cost. b) Calculate the gross margin based on actual cost. c) Explain why there is a difference