Question

harge of dogme Sofeday = Total safely - Total budget-break eve sales des - Beoo- 10 Austen Company makes a single product. Each unit requires $55 of direct materials. Manufacturing overhead (MOH) cost is applied in the amount of 150% of direct labor cost. Two thirds of the MOH cost is fixed. The company had no beginning or ending inventory in August. The company reports additional information for August below: A Sales quantity Selling price Manufacturing cost per unit Variable selling & administrative cost per unit Fixed selling & administrative cost X A 7,000 units 300 130 50- 290,500 2 100.000 350.000 A to A 7' 730.000 What was the total contribution margin for August? A. $ 1,190,000 B $ 1,400,000 C. $ 1,050,000 D. $ 840,000 E. None of the above. 385.000 TCM Cost Total CM. 2100 55 130 DM FOL + Mol toc + Mon - Product j;e% 18% ole 290,500, 350.000, 500

Answer 1

First we have to calculate the direct labor.

Let direct labor cost be x.

Manufacturing cost per unit = Direct Materials per unit + Direct Labor per unit + Manufacturing Overhead per unit

130 = 55 + x + 1.5x

130 = 55 + 2.5x

x = 30 per unit

Direct labor = 30 per unit

Manufacturing overhead = 30 * 1.5 = 45 per unit

Fixed Manufacturing Overhead = 45 * 2/3 = 30

Variable Manufacturing Overhead = 45 - 30 = 15

Sales revenue (7,000*300)	2,100,000
Variable cost (55+30+15+50)*7000	1,050,000
Contribution margin	1,050,000

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