Question

London Ceramics makes custom ceramic tiles. During March, the company started and finished Job #266. Job #266 consists of 2,500 tiles; each tile sells for $12.00. The company's records show the following direct materials were requisitioned for Job #266.Basic terra cotta tiles: 2,500 units at $4.00 per unit Specialty paint: 5 quarts at $7.00 per quartHigh gloss glaze: 4 quarts at $12.00 per quartLabor time records show the following employees worked on Job #266:Alice Cooper: 18 hours at $24 per hour Matthew Kline: 20 hours at $13 per hourSierra Ceramics allocates manufacturing overhead at a rate of $27 per direct labor hour.What is the gross profit per tile on Job #266?

Answer 1

Gross profit per unit= $7.28

Step-by-step explanation:

Giving the following information:

Job #266 consists of:

2,500 tiles; each tile sells for $12.00.

The following direct materials were requisitioned for Job #266:

Basic terra cotta tiles: 2,500 units at $4.00 per unit

Specialty paint: 5 quarts at $7.00 per quart

High gloss glaze: 4 quarts at $12.00 per quart

Labor time records show the following employees worked on Job #266:

Alice Cooper: 18 hours at $24 per hour

Matthew Kline: 20 hours at $13 per hour

Sierra Ceramics allocates manufacturing overhead at a rate of $27 per direct labor hour.

Gross profit= Sales - direct materials - direct labor - manufacturing overhead

Sales= 2500*12= $30,000

Direct materials:

Basic terra cotta tiles: 2,500*$4.00= $10,000

Specialty paint: 5*$7.00= $35

High gloss glaze: 4*$12.00= $48

Total= $10.083

Direct labor:

Alice Cooper: 18*$24= $432

Matthew Kline: 20*$13= $260

Total= $692

Manufacturing overhead= $27*38hours= $1026

Gross profit= 30000 - 10083 - 692 - 1026= $18,199

Gross profit per unit= 18199/2500= $7.28