Use the Information Below to Answer the Following Question(s) $\quad$

question 126

Multiple Choice

Use the information below to answer the following question(s) .
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: $\quad$ 2,000 units at $2.00 per unit
Specialty paint: $\quad$$\quad$$\quad$ 5 quarts at $4.00 per quart
High gloss glaze: $\quad$$\quad$ 3 quarts at $10.00 per quart

Labour time records show the following employees worked on Job #231:
Emily Jergens: $\quad$$\quad$$\quad$ 20 hours at $22 per hour
Dan Evrard: $\quad$$\quad$$\quad$$\quad$ 12 hours at $15 per hour

Sierra Ceramics allocates manufacturing overhead at a rate of $25 per direct labour hour.
-What is Sierra Ceramics' gross profit per tile on Job #231?

• A) $12.00
• B) $11.60
• C) $9.67
• D) $9.27

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Definitions:

Additional Unit

An incremental quantity of a product or service, typically considered in the context of production or consumption.

Substitution Effect

The change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods.

Income Effect

The alteration in the consumption habits of a person or an economy due to a variation in actual income.

Inferior Good

A type of good for which demand decreases when income increases, and vice versa, unlike normal goods where demand increases with an increase in income.