Head-First Company plans to sell 4,700 bicycle helmets at $75 each in the coming year. Product costs include:
Direct materials per helmet | $ 31 |
Direct labor per helmet | 6.50 |
Variable factory overhead per helmet | 2.75 |
Total fixed factory overhead | 20,000 |
Variable selling expense is a commission of $3.00 per helmet; fixed selling and administrative expense totals $28,600.
Required: | |
1. | Calculate the total variable cost per unit. |
2. | Calculate the total fixed expense for the year. |
3. | Prepare a contribution margin income statement for Head-First Company for the coming year. |
SOLUTION: 1 | |||
CALCULATION OF TOTAL VARIABLE COST PER UNIT | |||
Direct Materials Per Helmet | $ 31.00 | ||
Direct Labor Per Helmet | $ 6.50 | ||
Variable Factory Overhead per Helmet | $ 2.75 | ||
Variable Selling expenses per helmet | $ 3.00 | ||
Total Variable Cost | $ 43.25 | ||
Answer = $ 43.25 Per Helmet | |||
SOLUTION: 2 | |||
CALCULATION OF TOTAL FIXED EXPENSES OF THE YEAR | |||
Total Fixed Factory Overhead | $ 20,000.00 | ||
Fixed Selling and administrative Expenses | $ 28,600.00 | ||
Total | $ 48,600.00 | ||
Answer = $ 48,600 | |||
SOLUTION: 3 | |||
CONTRIBUTION MARGIN INCOME STATEMENT | |||
PARTICULARS | AMOUNT | ||
Sales (4,700 X $ 75) | $ 3,52,500 | ||
Less: Variable Cost (4,700 X $ 43.25 per Helmet) | $ 2,03,275 | ||
Contribution Margin | $ 1,49,225 | ||
Less: Fixed Expenses: | |||
Total Fixed Factory Overhead | $ 20,000 | ||
Fixed Selling and administrative Expenses | $ 28,600 | ||
Net Income | $ 1,00,625 | ||
Head-First Company plans to sell 4,700 bicycle helmets at $75 each in the coming year. Product...
Head-First Company plans to sell 4,700 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet $ 31 Direct labor per helmet 6.50 Variable factory overhead per helmet 2.75 Total fixed factory overhead 20,000 Variable selling expense is a commission of $3.00 per helmet; fixed selling and administrative expense totals $28,600. Required: 1. Calculate the total variable cost per unit. 2. Calculate the total fixed expense for the year. 3. Prepare a contribution margin...
Head-First Company plans to sell 4,700 bicycle helmets at $75 each in the coming year. Product costs include: Direct materials per helmet $ 31 Direct labor per helmet 6.50 Variable factory overhead per helmet 2.75 Total fixed factory overhead 20,000 Variable selling expense is a commission of $3.00 per helmet; fixed selling and administrative expense totals $28,600. Required: 1. Calculate the total variable cost per unit. 2. Calculate the total fixed expense for the year. 3. Prepare a contribution margin...
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