How much would the company''s gross margin increase


Last month, PeeWee Company manufactured 20,000 units and sold 18,000 of these units at a price of $8.00 per unit. Manufacturing costs consisted of direct labor, $30,000; direct materials, $32,000; variable manufacturing overhead, $3,600; fixed manufacturing overhead, $21,600. Selling and administrative costs totaled $24,000.

Assume PeeWee uses full costing? How much would the company's gross margin increase if sales increased 10%?

 

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Accounting Basics: How much would the company''s gross margin increase
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