Question

Miller Company’s total sales are $204,000. The company’s direct labor cost is $24,480, which represents 30% of its total conversion cost and 40% of its total prime cost. Its total selling and administrative expense is $30,600 and its only variable selling and administrative expense is a sales commission of 5% of sales. The company maintains no beginning or ending inventories and its manufacturing overhead costs are entirely fixed costs.

Required:

1. What is the total manufacturing overhead cost?

2. What is the total direct materials cost?

3. What is the total manufacturing cost?

4. What is the total variable selling and administrative cost?

5. What is the total variable cost?

6. What is the total fixed cost?

7. What is the total contribution margin?

Answer 1

1
Total conversion cost	81600	=24480/30%
Total manufacturing overhead cost	57120	=81600-24480
2
Total prime cost	61200	=24480/40%
Total direct materials cost	36720	=61200-24480
3
Direct materials cost	36720
Direct labor cost	24480
Manufacturing overhead cost	57120
Total manufacturing cost	118320
4
Total variable selling and administrative cost	10200	=204000*5%
5
Direct materials cost	36720
Direct labor cost	24480
Variable selling and administrative cost	10200
Total variable cost	71400
6
Manufacturing overhead cost	57120
Fixed selling and administrative expense	20400	=30600-10200
Total fixed cost	77520
7
Sales revenue	204000
Less: Total variable cost	71400
Total contribution margin	132600