Homework Answers
1. The right option is "B. $294,550".
Contribution margin = Sales - Variable expenses
Where, sales = Selling price per unit * 68,500 baseballs = $5 * 68,500 = $342,500
Variable expenses = ( Manufacturing costs per unit + Sales commission per unit ) * 68,500 baseballs = ( $0.45 per unit + 5% of $5 ) * 68,500 = $47,950
Contribution margin = Sales - Variable expenses = $342,500 - $47,950 = $294,550.
2. The right option is "B. $510".
Manufacturing overhead allocated to JOB 603 using departmental overhead rates
Total manufacturing overhead = Manufacturing overhead in Assembly department + Manufacturing overhead in Sanding department
where, Manufacturing overhead in Assembly department = Overhead rate per machine hours * Machine hours used = $40 * 11 = $440
Manufacturing overhead in Sanding department = Overhead rate per direct labor hours * Direct labor hours used = $10 * 7 = $70.
Total manufacturing overhead = Manufacturing overhead in Assembly department + Manufacturing overhead in Sanding department = $440 + $70 = $510.
3. The right option is " C. $428,625".
Gross profit = Sales - Cost of goods sold
where, sales = Selling price per unit * 67,500 units = $7 * 67,500 units = $472,500.
Cost of goods sold = manufacturing cost per unit * 67,500 units = $0.65 per unit * 67,500 units = $43,875
Gross profit = Sales - Cost of goods sold = $472,500 - $43,875 = $428,625.
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