Question

If one unit of Product Z2 used $1.70 of direct materials and $3.70 of direct labor, sold for $10.00, and was assigned overhead at the rate of 22% of direct labor costs, how much gross profit was realized from this sale

Answer 1

Answer:

$3.786

Explanation:

One product of Z2 was sold for $1.70

$3.70 of direct labour was used

It was sold for $10

The assigned overhead rate is 22%

Therefore the gross profit realized from the sale can be calculated as follows

= 10 - 1.70 - 3.70 - (3.70×22/100)

= 10-1.70-3.70-(3.70×0.22)

= 10-1.70-3.70-0.814

= $3.786

Hence the gross profit from this sale is $3.786