Sales revenue is $600,000; actual manufacturing overhead is $104,000; allocated manufacturing overhead is $95,000; and cost of goods sold before adjustment is $375,000.What is the actual gross profit?

Question

Quizplus · Accepted Answer

To calculate the actual gross profit, we need to subtract the cost of goods sold (before adjustment) and the actual manufacturing overhead from the sales revenue:

Actual Gross Profit = Sales Revenue - Cost of Goods Sold - Actual Manufacturing Overhead
Actual Gross Profit = $600,000 - $375,000 - $104,000
Actual Gross Profit = $121,000

However, the question asks for the actual gross profit, which means we should not use the allocated manufacturing overhead in the calculation. Allocated manufacturing overhead is just an estimate, and it may not reflect the actual overhead expenses incurred. Therefore, we should use the actual manufacturing overhead instead.

The only option that matches this calculation is D, with an actual gross profit of $121,000.

Sales Revenue Is $600,000; Actual Manufacturing Overhead Is $104,000; Allocated