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Topic: Business
Number of pages / Number of words: 3 / 786
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The gross margin shown in the figure above is determined by multiplying Sales by 0.40. Manufacturing overhead is calculated by solving the following equation:

Since we know that 70% of the conversion cost is manufacturing overhead, the equation now becomes:

When solved this gives us conversion cost equal to $600,000 and manufacturing overhead equal to $420,000...


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Manufacturing overhead is calculated by solving the following equation:

Since we know that 70% of the conversion cost is manufacturing overhead, the equation now becomes:

When solved this gives us conversion cost equal to $600,000 and manufacturing overhead equal to $420,000. The cost of goods sold will be Sales minus Gross margin, which is $720,000...


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