Question

Dark Coral Company manufactures a wide variety of customized products. During June, Dark Coral worked on Job 25. Total cost of Job 25 amounted to $9,000. During June, this job was completed and sold at 120 percent of cost. Calculate the price and the gross margin for Job 25.

a. The price of Job 25 is $10,800, and the gross margin is $1,800.
b. The price of Job 25 is $9,800, and the gross margin is $1,800.
c. The price of Job 25 is $11,200, and the gross margin is $2,200.
d. The price of Job 25 is $10,800, and the gross margin is $1,650.

Answer 1

The selling price for Job 25 is found by multiplying the total cost by 1.20, giving us $10,800. The gross margin is the difference between this selling price and the cost, which is $1,800.

Step-by-step explanation:

The question pertains to calculating the selling price and gross margin for Job 25 at Dark Coral Company which manufactures customized products. Since the job was sold at 120 percent of its cost, you simply calculate the selling price by multiplying the total cost by 1.20 (120%). The gross margin is the difference between the selling price and the cost of goods sold.

Here's the calculation:

• Total cost of Job 25: $9,000
• Selling price (120% of cost): $9,000 x 1.20 = $10,800
• Gross Margin: Selling price - Total cost = $10,800 - $9,000 = $1,800

Therefore, the correct answer is that the price of Job 25 is $10,800, and the gross margin is $1,800.