Question

The Heartlake Corporation manufactures and sells toy gyroscopes. The following data is related to sales and production of the toy gyroscopes for last year. Selling price per unit $8.20 Variable manufacturing costs per unit $1.84 Variable selling and administrative expenses per unit $4.95 Fixed manufacturing overhead (in total) $80,000 Fixed selling and administrative expenses (in total) $84,000 Units produced during the year 510,000 Units sold during year 170,000 Using absorption costing, what is gross profit for last month

Answer 1

Gross profit= $814,300

Step-by-step explanation:

Giving the following information:

Selling price per unit $8.20

Variable manufacturing costs per unit $1.84

Fixed manufacturing overhead (in total) $80,000

Units produced during the year 510,000

Units sold during year 170,000

Under the absorption costing method, the unitary product cost is calculated using the variable manufacturing cost and the unitary fixed manufacturing overhead.

The gross profit is the result of deducting from sales the cost of goods sold.

First, we need to calculate the unitary total cost:

Unitary cost= 1.84 + (80,000/510,000 units)= $3.41

Now, we can calculate the gross profit:

Gross profit= 170,000*8.2 - 170,000*3.41= $814,300