An electronics store is running a promotion where for every video game purchased, the customer receives a coupon upon checkout to purchase a second game at a 50% discount. the coupons expire in one year. the store normally recognized a gross profit margin of 40% of the selling price on video games. how would the store account for a purchase using the discount coupon?

Actual gross profit $262,200

Explanation:

The computation of the actual gross profit is as follows;

Allocated manufacturing overhead

$104,400

Actual manufacturing overhead

$92,000

Over applied manufacturing overhead

$12,400

Unadjusted cost of goods sold

$335,900

Less:

Over applied manufacturing overhead

($12,400)

Adjusted cost of goods sold

$323,500

Sales revenue

$585,700

Less:

Adjusted cost of goods sold

($323,500)

Actual gross profit

$262,200