14 May WHAT WOULD BE THE COMPANY’S GROSS MARGIN FOR 2006?
Karakove Products Co. incurred the following costs in 2006, the company’s first year of operations: $28,000 for direct materials used in manufacturing; $42,000 for manufacturing equipment to be straight-line depreciated over five years with a $2,000 salvage value; $16,000 for office furniture to be straight-line depreciated over four years with no salvage value; $14,000 for utilities associated with the manufacturing facility; $4,000 for office utilities; $38,000 for the company president’s salary; $24,000 for the manufacturing manager’s salary; $48,000 for production workers’ wages; and $22,000 for commissions paid to salespeople. If the company produced 7,625 units during the year and sold 6,400 units for $22 each, What would be the company’s gross margin for 2006?
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