The following beginning and ending inventory balances apply to XYZ’s 2008 accounting period:
Raw Materials Inventory: Beginning- $24,000; Ending- $22,000; Work in Process Inventory: Beginning- $32,000; Ending- $33,000; Finished Goods Inventory: Beginning- $20,000; Ending- $17,000
During 2008, the company purchased $234,000 of direct raw materials. It incurred $180,000 of direct labor costs for the year and allocated $260,000 of manufacturing overhead costs to work in process. There was no overapplied or underapplied overhead. Revenue from goods sold during the year was $800,000.
XYZ’s gross margin in 2008 was $122,000. How do you work out this problem to get $122,000?