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

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Business

Natasha Peters

1 May, 21:16

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

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Scout · Answer 1

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