Question

If one unit of Product Z2 used $2.70 of direct materials and $3.20 of direct labor, sold for $10.00, and was assigned overhead at the rate of 32% of direct labor costs, how much gross profit was realized from this sale

Answer 1

Answer:

Gross profit= $3.076

Explanation:

Giving the following information:

Product Z2:

Direct material= $2.70

Direct labor= $3.20

Overhead rate= 32% of direct labor dollars

Selling price= $10.00

To calculate the gross profit, first, we need to calculate the unitary cost of Product Z2:

Unitary cost= direct material + direct labor + allocated overhead

Unitary cost= 2.7 + 3.2 + (0.32*3.2)= $6.924

Gross profit= 10 - 6.924= $3.076