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15 September, 19:46

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? (Round your intermediate calculations and final answer to two decimal places.) a. $5.40. b. $3.79. c. $.81. d. $4.60. e. $10.00.

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  1. 15 September, 20:07
    0
    The correct answer is B

    Explanation:

    The gross profit is computed as:

    Gross Profit (GP) = Selling price - Expense

    where

    Selling price amounts to $10.00

    Expenses involve DM (Direct Material), DL (Direct Labor) and Overhead

    So,

    DM amounts to $1.70

    DL amounts to $3.70

    And

    Overhead = 22 % of direct labor

    = 22% * $3.70

    = $0.814

    Putting the values above:

    GP = $10.00 - ($1.70 + $3.70 + $0.814)

    GP = $10.00 - $6.214

    GP = $3.786 or $3.79
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