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CoursHeroTranscribedText: Broup Case 2: Costing and protability management Atlantic manufacturing company uses process costing. All materials are added at the beginning of the process. The company uses weighted average method in measuring unit costs. There are 100,000 units in the beginning workinprocess in the month of May [T he company started its production in late April and did not nish producing any unit}. The conversion work is 70% complete. The costs of beginning WIP are $1,250,000, including $100,000 of input of materials {$1 per EU}, and $140,000 for labor costs [$2 per EU) and 1,010,000 overhead costs. The overhead costs include only xed costs: $410,000 for factory rent and $600,000 for insurance. During May, 800,000 units were started and 700,000 units nished. The concurrent costs includes $600,000 for materials, $1,500,000 for labor costs and $1,010,000 overhead costs. The ending workinprocess in May is 200,000 units with conversion work 60% complete. The company does not have any beginning balance of nished good inventory account. During May, it sold 700,000 units of its product. The price of ggr unit is $10. a. (1 point} What is the gross margin of the company? b. (1 points} Suppose the company only sold 600,000 units instead of all 700,000 units. Whatis its gross margin? c. (2 points} Suppose dun'ng May, the managers decide to increase production from 800,000 units to 1,200,000 units and nished 1,100,000 units. The concurrent costs includes $1,200,000 for materials, $2,300,000 for labor costs and $1,010,000 overhead costs. The ending workin-process in May is still 200,000 units with conversion work 60% complete. The sales volume turns out to be still 600,000. What is the gross margin under this producon plan? d. (1 point} Bney comment on the relation between gross margin and sales based on the above calculations. Do you noce anything unusual about the relation? It so, what is your explanation

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