Question
A company reported the following information for the production and sale of 600,000 gallons of oil: Sales$1,500,000 Production costs: Direct materials $575,000 Direct labor$300,000 Applied
A company reported the following information for the production and sale of 600,000 gallons of oil:
Sales$1,500,000
Production costs:
Direct materials $575,000
Direct labor$300,000
Applied overhead (using ABC)
Overhead based on number of gallons375,000
Overhead based on number of batches100,000
Overhead based on number of ingredients 180,000
Total Production costs 1,530,000
Gross profit($30,000)
Overhead was applied based on the following predetermined overhead rates:
$0.75 per gallon
$500 per batch
$1000 per ingredient
What would be the gross profit if the company increased the selling price per gallon by $0.10?
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