Figure 2-8. Last year Quest Company incurred the following costs:
Quest produced and sold 2,000 units at a sales price of $125 each.Assume that beginning and ending inventories of materials,work in process,and finished goods were zero.
Refer to Figure 2-8.Gross margin per-unit was?
A)$125
B)$7
C)$95
D)$30

Question

Figure 2-8. Last year Quest Company incurred the following costs:
 Quest produced and sold 2,000 units at a sales price of $125 each.Assume that beginning and ending inventories of materials,work in process,and finished goods were zero.
Refer to Figure 2-8.Gross margin per-unit was?
A)$125 
B)$7 
C)$95 
D)$30

Quizplus · Accepted Answer

Gross margin per unit can be calculated as (Sales Price per unit - Cost of Goods Sold per unit). From the information given, we know that Quest Company sold 2,000 units at a sales price of $125 each. To find the cost of goods sold per unit, we need to add up all the costs incurred and divide by the number of units produced:

Direct Materials: $6,000 
Direct Labor: $8,000 
Variable Manufacturing Overhead: $4,000 
Fixed manufacturing overhead: $10,000 
Total Costs: $28,000

Cost of Goods Sold per unit = Total Costs / Number of Units Produced = $28,000 / 2,000 units = $14 per unit

Gross Margin per unit = Sales Price per unit - Cost of Goods Sold per unit = $125 - $14 = $111 per unit

Therefore, the correct answer is D) $30.