question 3\nknowles & foreman company reported the following data on its income statement at the end of the…

question 3\nknowles & foreman company reported the following data on its income statement at the end of the current year:\nper - unit product cost $35\ngross margin percentage 41.20%\nselling and administrative expenses $30,900\noperating income $10,300\nhow many units were sold during the year?\n(a) 1,000 units\n(b) 3,333 units\n(c) 1,500 units\n(d) 1,680 units\nlast saved 8:40:26 pm\nquestions filter (50)

question 3\nknowles & foreman company reported the following data on its income statement at the end of the current year:\nper - unit product cost $35\ngross margin percentage 41.20%\nselling and administrative expenses $30,900\noperating income $10,300\nhow many units were sold during the year?\n(a) 1,000 units\n(b) 3,333 units\n(c) 1,500 units\n(d) 1,680 units\nlast saved 8:40:26 pm\nquestions filter (50)

Answer

Explanation:

Step1: Calculate gross margin amount

Gross margin = Selling and administrative expenses+Operating income. So, Gross margin = $30900 + 10300=$41200$.

Step2: Let the number of units be $x$ and selling - price per unit be $S$.

We know that per - unit product cost $C = 35$, and gross margin percentage $g=41.20%=0.412$. The formula for gross margin percentage is $g=\frac{S - C}{S}$. Cross - multiplying gives $gS=S - C$, then $C = S(1 - g)$. So, $S=\frac{C}{1 - g}=\frac{35}{1 - 0.412}=\frac{35}{0.588}\approx59.52$.

Step3: Calculate number of units sold

Gross margin = Number of units×(Selling price per unit - Product cost per unit). Let the number of units be $x$. We know gross margin = 41200, selling price per unit $S\approx59.52$, and product cost per unit $C = 35$. Also, Gross margin=$x(S - C)$. So, $x=\frac{\text{Gross margin}}{S - C}=\frac{41200}{59.52-35}=\frac{41200}{24.52}\approx1680$.

Answer:

D. 1,680 units