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Managerial Accounting

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Normal Job Order Costing: Calculating the Net Profit (SW)

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Sassy Wild Company designs and provides custom tattoos. Sassy Wild's actual and estimated costs for a full-back tattoo (split into 4 sessions) are as follows:

Actual materials: \$200
Actual labor: \$115 an hour for 20 hours (total)
Standard overhead rate: \$35 per labor hour
Standard profit margin: 20% of cost

If the client pays for the entire tattoo up front, they receive a 5% discount.

How much profit will Sassy Wild earn on the entire discounted tattoo?