Answer:
A. $15,000
Explanation:
Gross margin is the revenue from sales deducted by the production cost of goods sold.
The total cost to produce all 5,000 units is:
[tex]C_{5,000} = 14,000+19,000+$17,000\\C_{5,000} = 50,000[/tex]
The production cost of the 3,000 units sold is:
[tex]C_{3,000}=C_{5,000}*\frac{3,000}{5,000}=50,000*\frac{3,000}{5,000} \\C_{3,000}=30,000[/tex]
If each of the 3,000 units sells for $15.00, the gross margin for the first year is:
[tex]GM = (15.00*3,000) - 30,000\\GM= 15,000[/tex]
The correct alternative is A. $15,000
*Note that general, selling, and administrative expenses were not included since they don't qualify as production costs.
