Question

A company named “Dyona Automobiles”has received an order for 5,000 widgets for a total sale price of $5,000 and wants to determine the gross profit that will be generated by completing the order. The other details for producing 100,000 widgets are given as follows: 1.Raw Materials Costs-$10,000 2.Direct Labor Costs-$50,000

Answer 1

Answer:

Step-by-step explanation:

Here we need to get the cost of producing one widget.

We get this from the information given above :

For 100000 widgets :

Raw materials = $ 10000

Labor = $ 50000

Raw materials for one widget = 10000/100000 = $ 0.1

Labor = 50000/100000 = $ 0.5

Total cost for one widget = 0.5 + 0.1 = $ 0.60

For 5000 = 5000 × 0.6 = 3000

= $ 3000

The gross profit is therefore equals to :

= 5000 -3000 = $ 2000

They will get a gross profit of $ 2000.