Sierra Ceramics makes custom ceramic tiles.During March,the company started and finished Job #231.Job #231 consists of 2,000 tiles; each tile sells for $12.00.The company's records show the following direct materials were requisitioned for Job #231. Basic terra cotta tiles: 2,000 units at $2.00 per unit
Specialty paint: 5 quarts at $4.00 per quart
High gloss glaze: 3 quarts at $10.00 per quart
Labor time records show the following employees worked on Job #231:
Emily Jergens: 20 hours at $22 per hour
Dan Evrard: 12 hours at $15 per hour
Sierra Ceramics allocates manufacturing overhead at a rate of $25 per direct labor hour.
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What is the gross profit per tile on Job #231?

Question

Quizplus · Accepted Answer

Gross profit per tile = (Selling price per tile - Total cost per tile)Total cost per tile = (Direct materials cost per tile + Direct labor cost per tile + Manufacturing overhead cost per tile)Direct materials cost per tile = (2,000 units x $2.00 per unit + 5 quarts x $4.00 per quart + 3 quarts x $10.00 per quart) / 2,000 tiles = $2.50Direct labor cost per tile = (20 hours x $22 per hour + 12 hours x $15 per hour) / 2,000 tiles = $4.20Manufacturing overhead cost per tile = $25 per direct labor hour x (20 hours + 12 hours) / 2,000 tiles = $3.75Total cost per tile = $2.50 + $4.20 + $3.75 = $10.45Gross profit per tile = $12.00 - $10.45 = $1.55

Sierra Ceramics Makes Custom Ceramic Tiles