Teenage International manufactures video equipment for games. For the month of M

Question

Teenage International manufactures video equipment for games. For the month of May 2015 there was $7,000 of direct material used and $4,600 of direct manufacturing labor at $46 per hour for each unit. Manufacturing overhead is applied at $50 per direct manufacturing labor hour. Assume that there wasn’t any beginning or ending work-in-process or beginning finished goods. In other words, all the units produced during May 2015 were sold in which there wouldn’t be any ending finished goods.

Required: Calculate the gross profit earned on 60 units if each unit sells for $475.

Explanation / Answer

Assuming 60 units produced and sold in May 2015 Teenage International Details Qty/Hr Rate Amt$ Sales               60             475          28,500 Ditect Materials            7,000 Ditect Labor             100               46            4,600 Manufacturing Overhead             100               50            5,000 Gross Profit          11,900

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