Question

1. Sauer Company sells folding chairs for $40.00 per unit. Variable cost is $15.00 per unit. Each chair requires 4 direct labor hours and 2 machine hours to produce. Which of the following is the correct contribution margin per machine hour?
   1. $12.50
   2. $0.08
   3. None of these
   4. $0.10
   5. e. $6.25
2. Archer Company uses a job order cost system. During the month of September, the company worked on Job B. The information contained on the cost sheet is as follows:

3.                             Job B

   Beg Balance       $1,500

   Direct Material 800

   Direct Labor       2,300

   The company applies overhead at 120% of direct labor cost. During September Job B was completed and sold in October. If Job B sold for $8,000, what was the amount of gross profit for this job? (Ignore any consideration of over/under applied overhead)

4. 1. a. $3,400
   2. b. $2,940
   3. c. $7,360
   4. d. $640

Answer 1

--All working forms part of the answer

--Answer #1

A	Sale price per chair	$                   40.00
B	Variable cost per chair	$                   15.00
C = A - B	Contribution margin per chair	$                   25.00
D	Machine hours used per chair	2
E = C/D	Contribution margin per machine hour	$                   12.50
	Correct Answer	Option 'a' $ 12.50

--Answer #2

A	Beginning Bal	$1,500.00
B	Direct material	$800.00
C	Direct Labor	$2,300.00
D = C x 120%	Manufacturing Overheads applied	$2,760.00
E = A+B+C+D	Total Cost of the job	$7,360.00
F	Job Sold for	$8,000.00
G = F - E	Gross Profits	$640.00
	Correct Answer	Option 'D' $ 640