Question
In: Accounting
Miller Company’s total sales are $153,000. The company’s direct labor cost is $18,360, which represents 30%...
Miller Company’s total sales are $153,000. The company’s direct labor cost is $18,360, which represents 30% of its total conversion cost and 40% of its total prime cost. Its total selling and administrative expense is $22,950 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
| 1 | Total manufacturing overhead cost: $42840 |
| Direct labor = $18360 = 30% of total conversion cost | |
| Total conversion cost = $18360 / 30% = $61200 | |
| Total conversion cost = Direct labor + Manufacturing overhead | |
| Manufacturing overhead = Total conversion cost - Direct labor = $61200 - $18360 = $42840 | |
| 2 | Total direct materials cost: $27540 |
| Direct labor = $18360 = 40% of total prime cost | |
| Total prime cost = $18360 / 40% = $45900 | |
| Total prime cost = Direct material + Direct labor | |
| Direct material = Total prime cost - Direct labor = $45900 - $18360 = $27540 | |
| 3 | Total manufacturing cost: $88740 |
| Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead = $27540 + $18360 + $42840 = $88740 | |
| 4 | Total variable selling and administrative cost: $7650 |
| Variable selling and administrative cost = Sales commission = 5% x $153000 = $7650 | |
| 5 | Total variable cost: $53550 |
| Total variable cost = Direct materials + Direct labor + Sales commission = $27540 + $18360 + $7650 = $53550 | |
| 6 | Total fixed cost: $58140 |
| Total fixed cost = Manufacturing overheads + Fixed selling and administrative expense | |
| Fixed selling and administrative expense = Total selling and administrative expense - Sales commission = $22950 - $7650 = $15300 | |
| Total fixed cost = $42840 + $15300 = $58140 | |
| 7 | Total contribution margin: $99450 |
| Total contribution margin = Sales - Total variable cost = $153000 - $53550 = $99450 |
ekkarill92 answered 2 years agoRelated Solutions
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