The budgeted gross margin for May is $50,000.
Gross margin means the result of gross income after variable costs incurred in achieving the income have been deducted.
Given information
Unit sales 5,000
Selling price per unit $40
Direct materials cost per unit $12
Direct labor cost per unit $10
Direct labor wage rate per hour $20
Predetermined overheard rate per direct labor-hour $16
Direct Labor hours required per unit = Direct labor cost per unit / Direct labor rate per unit
Direct Labor hours required per unit = $10 / $20
Direct Labor hours required per unit = 0.5 hours
Overhead cost per unit = Direct labor hours required per unit * Predetermined overhead rate per direct labor hour
Overhead cost per unit = 0.5 * $16
Overhead cost per unit = $8 per unit
Total Product Cost per Unit = Direct Materials Cost + Direct Labor Cost + Overhead Cost
Total Product Cost per Unit = $12 + $10 + $8
Total Product Cost per Unit = $30 per unit
Budgeted Cost of goods sold for May = Budgeted unit sales * Product cost per unit
Budgeted Cost of goods sold for May = 5,000 units * $30
Budgeted Cost of goods sold for May = $150,000
Budgeted Sales revenue for May = Budgeted unit sales * Selling price per unit
Budgeted Sales revenue for May = 5,000 units * $40
Budgeted Sales revenue for May = $200,000
Budgeted Gross Margin for May = Budgeted Sales Revenue - Budgeted Cost of Goods Sold
Budgeted Gross Margin for May = $200,000 - $150,000
Budgeted Gross Margin for May = $50,000
Therefore, the Budgeted Gross Margin for May is $50,000.
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