Pederson Company reported the following:

Manufacturing costs $2,500,000

Units manufactured $50,000

Units sold 43000 sold for $75 per unit units.

Beginning inventory 0 units.

What is the amount of gross profit margin?

A. $5,375,000

B. $3,225,000

C. $1,075,000

D. $1,250,000

The correct option is C,$1075,000.00 as computed below.

Explanation:

The following relates to computation of gross profit margin for Pederson Company:

Sales revenue ($75*43000) $ 3,225,000.00

Manufacturing costs $2,500,000.00

less closing stock

$2500000/50000 * (50000-43000) ($350,000)

($2,150,000.00)

Gross profit margin $1,075,000.00

Cost of closing inventory of $350000 was deducted from total manufacturing costs to arrive at costs of goods sold, which was then deducted from sales revenue to arrive gross profit margin on the 43000 units sold.