Five Card Draw manufactures and sells 25,000 units of Diamonds, which retails for $180, and 26,000 units of Clubs, which retails for $190. The direct materials cost is $25 per unit of Diamonds and $30 per unit of Clubs. The labor rate is $25 per hour, and Five Card Draw estimated 128,000 direct labor hours. It takes 2 direct labor hours to manufacture Diamonds and 3 hours for Clubs. The total estimated overhead is $512,000. Five Card Draw uses the traditional allocation method based on direct labor hours. A. What is the gross profit per unit for Diamonds and Clubs? Gross Profit Diamonds $fill in the blank 1 per unit Clubs $fill in the blank 2 per unit B. What is the total gross profit for the year? Total gross profit $fill in the blank 3
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Five Card Draw manufactures and sells 25,000 units of Diamonds, which retails for $180, and 26,000 units of Clubs, which retails for $190. The direct materials cost is $25 per unit of Diamonds and $30 per unit of Clubs. The labor rate is $25 per hour, and Five Card Draw estimated 128,000 direct labor hours. It takes 2 direct labor hours to manufacture Diamonds and 3 hours for Clubs. The total estimated overhead is $512,000. Five Card Draw uses the traditional allocation method based on direct labor hours.
A. What is the gross profit per unit for Diamonds and Clubs?
| Gross Profit | ||
| Diamonds | $fill in the blank 1 | per unit |
| Clubs | $fill in the blank 2 | per unit |
B. What is the total gross profit for the year?
Total gross profit $fill in the blank 3
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