Question

Sandhill Industries carries no inventories. Its product is manufactured only when a customer’s order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2020, Sandhill’s break-even point was $1.35 million. On sales of $1.19 million, its income statement showed a gross profit of $202,600, direct materials cost of $405,000, and direct labor costs of $505,000. The contribution margin was $166,600, and variable manufacturing overhead was $51,000.

Calculate the following:

1.		Variable selling and administrative expenses.		$
2.		Fixed manufacturing overhead.		$
3.		Fixed selling and administrative expenses.		$

Question 16 --/1 View Policies Current Attempt in Progress Sandhill Industries carries no inventories. Its product is manufactured only when a customer's order is received. It is then shipped immediately after it is made. For its fiscal year ended October 31, 2020, Sandhill's break-even point was $1.35 million. On sales of $1.19 million, its income statement showed a gross profit of $202,600, direct materials cost of $405,000, and direct labor costs of $505,000. The contribution margin was $166,600, and variable manufacturing overhead was $51,000. Calculate the following: 1. Variable selling and administrative expenses. A 2. Fixed manufacturing overhead. 3. Fixed selling and administrative expenses. $

Answer 1

1.

Variable selling and administrative expenses:

= $1,190,000 - $405,000 - $505,000 - $166,600 - $51,000

= $62,400

2.

Fixed manufacturing overhead:

= $1,190,000 - $202,600 - $405,000 - $505,000 - $51,000

= $26,400

3.

Contribution margin = $166,600 / $1,190,000 = 14%

Total fixed cost = $1,350,000 X 14% = $189,000

Fixed selling and administrative expense = $189,000 - $26,400 = $162,600