London Ceramics makes custom ceramic tiles. During March, the company started and finished Job #266. Job #266 consists of 2800 tiles; each tile sells for $13.00. The company's records show the following direct materials were requisitioned for Job #266. Basic terra cotta tiles: 2800 units at $9.00 per unit
Specialty paint: 7 quarts at $12.00 per quart
High gloss glaze: 14 quarts at $16.00 per quart
Labor time records show the following employees worked on Job #266:
Alice Cooper: 24 hours at $31 per hour
Matthew Kline: 24 hours at $17 per hour
Sierra Ceramics allocates manufacturing overhead at a rate of $30 per direct labor hour.
What is the gross profit per tile on Job #266?

Question

Quizplus · Accepted Answer

The gross profit per tile is calculated by subtracting the cost per tile from the selling price per tile. The selling price per tile is $13.00. The cost per tile includes direct materials, direct labor, and manufacturing overhead. Direct materials cost is calculated as (2800 units * $9.00) + (7 quarts * $12.00) + (14 quarts * $16.00) = $25,200 + $84 + $224 = $25,508. Direct labor cost is (24 hours * $31) + (24 hours * $17) = $744 + $408 = $1,152. Manufacturing overhead is allocated at $30 per direct labor hour, so the total overhead is (24 + 24) hours * $30 = 48 hours * $30 = $1,440. The total cost is $25,508 (materials) + $1,152 (labor) + $1,440 (overhead) = $28,100. The cost per tile is $28,100 / 2800 tiles = $10.04. The gross profit per tile is $13.00 (selling price) - $10.04 (cost) = $2.96.

London Ceramics Makes Custom Ceramic Tiles