If one unit of Product Z2 used $2.50 of direct materials and $3.00 of direct labor,sold for $8.00,and was assigned overhead at the rate of 30% of direct labor costs,how much gross profit was realized from this sale?
A)$8.00.
B)$5.50.
C)$2.50.
D)$1.60.
E)$0.90.

Question

Quizplus · Accepted Answer

Gross profit is calculated as sales price minus total costs (direct materials, direct labor, and overhead). The overhead is 30% of direct labor, which is $0.90 (30% of $3.00). Total cost is $2.50 (materials) + $3.00 (labor) + $0.90 (overhead) = $6.40. Gross profit is $8.00 (sales) - $6.40 (total cost) = $1.60.

If One Unit of Product Z2 Used $2