Question

a.

X Company has the following estimated costs for 2020: Direct materials Direct labor Factory supplies Factory supervision Marketing research Factory rent Sales salaries Factory insurance $63,300 22,100 21,000 30,900 40,200 41,000 42,000 65,800 X Company estimates that direct labor hours for the year will be 1,300, and machines will be operated for 67,000 hours. If overhead is allocated on the basis of direct labor hours, what will the 2020 overhead rate be? 148700 Submit Answer Incorrect. Tries 1/3 Previous Tries

b.

c.

d.

e.

f.

g.

Need parts a-g answered.

Answer 1

a.

Overhead Rate =

$                122.08

Working:

Factory Supplies	$          21,000.00
Factory Supervision	$          30,900.00
Factory Rent	$          41,000.00
Factory Insurance	$          65,800.00
Total Manufacturing Overhead	$      1,58,700.00
Total Direct Labor Hours	1,300
Overhead Rate =	$                122.08
	=158700/1300

b.

Total Cost for 1500 units in March

$      1,06,910.00

Working:

	Per unit	1500 units
Variable Overhead Cost ((56000-27440)/1000)	$                  28.56	$       42,840.00
Variable Administrative Cost (7260/1000)	$                    7.26	$       10,890.00
Fixed Overhead Cost		$       27,440.00
Fixed Administrative Cost (33000-7260)		$       25,740.00
Total Cost for 1500 units		$   1,06,910.00

c.

Total fixed cost for December =

$3198

Working:

Using high low method:
Variable cost per unit =	(High cost -Low cost )/(High volume - Low Volume)
Variable cost per unit =	=(11438-7118)/(5150-2450)
Variable cost per unit =	$1.60
Variable cost for May =	=1.6*2450
Variable cost for May =	$3920
Fixed cost =	=7118-3920
Fixed cost =	$3198
Therefore, Total fixed cost for December =	$3198

d.

Units to be sold (757000/139.80)

5415

Working:

Selling Price per unit	$           265.50
Variable cost per unit	$           130.60
Add: Deccrease in variable cost per unit	$              -4.90
Revised Variable cost	$           125.70
Contribution Margin per unit (265.50-125.70	$           139.80
Required Profit	$     40,000.00
Add: Fixed Cost	$ 6,93,000.00
Add: Increase in fixed cost	$     24,000.00
Required contribution	$ 7,57,000.00
Contribution Margin per unit	$           139.80
Units to be sold (757000/139.80)	5415

e.

Revenue (176686.67/0.32)

$ 5,52,145.83 or $5,52,146

Working:

Required profit after tax	$     43,300.00
Add: Tax @40% (43300/60%)*40%	$     28,866.67
Profit before tax	$     72,166.67
Add: Fixed Cost (87100+17420)	$ 1,04,520.00
Contribution	$ 1,76,686.67
Revenue (176686.67/0.32)	$ 5,52,145.83

f.

Selling Price per unit

$                68.35

Working:

Required Profit	$    7,50,075.00
Add: Fixed Cost	$    3,28,500.00
Required contribution	$ 10,78,575.00
Units to be sold	$        21,900.00
Contribution per unit	$                49.25
Add: Variable cost per unit	$                19.10
Selling Price per unit	$                68.35

g.

Break Even Sales =

$ 5,88,235.29

Working:

	Revenue	CM
Product A	$ 3,52,118.00	$ 1,40,998.00
Product B	$ 2,43,586.00	$     71,651.00
Total	$ 5,95,704.00	$ 2,12,649.00
CM Ratio = CM /Revenue *100	35.70%
	=212649/595704*100
Budgeted Fixed Cost	$ 2,10,000.00
Break Even Sales =	Budgeted Fixed Cost / CM %
Break Even Sales =	$ 5,88,235.29
	=210000/35.7%