Question

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Miller Company’s total sales are $210,000. The company’s direct labor cost is $25,200, which represents 30%...

Miller Company’s total sales are $210,000. The company’s direct labor cost is $25,200, which represents 30% of its total conversion cost and 40% of its total prime cost. Its total selling and administrative expense is $31,500 and its only variable selling and administrative expense is a sales commission of 5% of sales. The company maintains no beginning or ending inventories and its manufacturing overhead costs are entirely fixed costs.

Required:

1. What is the total manufacturing overhead cost?

2. What is the total direct materials cost?

3. What is the total manufacturing cost?

4. What is the total variable selling and administrative cost?

5. What is the total variable cost?

6. What is the total fixed cost?

7. What is the total contribution margin?

Solutions

Expert Solution

Answer-1)- The total manufacturing overhead cost is = $58800.

Explanation- Manufacturing overhead costs = Total conversion costs – Direct labor costs

= $84000 - $25200

= $58800

Where- Total conversion costs = Direct labor costs/30%

= $25200/30%

= $84000

Where- Conversion costs = Direct labor costs+ Manufacturing overhead costs

2)- The total direct materials cost is =

Explanation- Direct materials costs = Total prime costs- Direct labor costs

= $63000 - $25200

= $37800

Where- Total prime costs= Direct labor costs/40%

= $25200/40%

= $63000

Where- Prime costs = Direct materials costs + Direct labor costs

3)- The total manufacturing costs = $121800.

Explanation- The total manufacturing costs = Direct materials costs + Direct labor costs+ Manufacturing overhead costs

= $37800+$25200+$58800

= $121800

4)- The total variable selling and administrative cost is = $10500.

Explanation- Total variable selling and administrative cost = Sales * 5%

= $210000*5%

= $10500

5)- The total variable cost is= Direct materials costs + Direct labor costs+ Variable Selling and administrative costs

= $37800+$25200+$10500

= $73500

6)- The total fixed cost is = Manufacturing overhead costs+ Fixed selling and administrative costs

= $58800+$20000

= $78800

Where- Fixed selling and administrative costs = Total selling and administrative cost - Variable selling and administrative cost

= $31500 - $10500

= $20000

7)- The total contribution margin is = Total sales – Total variable costs

= $210000 - $73500

= $136500

ekkarill92 answered 2 years ago
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