Calico Corporation produced 2,000 units in Job 903. The following data is provided for Job 903 for the year: What is the gross profit for Job 903 before adjustment for over- or underallocated overhead? (Round to two decimal places.)

Question

Calico Corporation produced 2,000 units in Job 903. The following data is provided for Job 903 for the year:  What is the gross profit for Job 903 before adjustment for over- or underallocated overhead? (Round to two decimal places.)

Quizplus · Accepted Answer

To calculate the gross profit for Job 903 before adjustment for over- or underallocated overhead, we need to use the following formula:

Gross Profit = Total Sales - Total Cost of Goods Sold

Total Sales = 2,000 x $5 = $10,000 (since each unit was sold for $5) 
Total Cost of Goods Sold = Direct Materials + Direct Labor + Manufacturing Overhead

Direct Materials = 2,000 x $1.50 = $3,000 
Direct Labor = 2,000 x $1 = $2,000 
Manufacturing Overhead = $3,500 (given in the table)

Total Cost of Goods Sold = $3,000 + $2,000 + $3,500 = $8,500

Gross Profit = $10,000 - $8,500 = $1,500

Therefore, the gross profit for Job 903 before adjustment for over- or underallocated overhead is $1,500, which is closest to option A ($3,359.50) after rounding to two decimal places.

Calico Corporation Produced 2,000 Units in Job 903