Answer:
1. Total manufacturing overhead cost = $35,000
2. Total Direct Material cost = $22,500
3. Total manufacturing cost = $72,500
4. Total Variable Selling and Administrative Cost = $6,000
5. Total variable cost = $43,500
6. Total Fixed Cost = $47,000
7. Total contribution margin = $76,500
Step-by-step explanation:
Provided Sales = $120,000
Direct labor Cost = $15,000 which = 30% of total conversion cost
Total conversion cost = $15,000/30% = $50,000
Conversion cost = Labor cost + Manufacturing cost, manufacturing cost = $50,000 - $15,000 = $35,000
Provided Direct labor cost is 40% of total prime cost.
Total prime cost = Direct material + direct labor = $15,000/40% = $37,500
Direct material = $37,500 - $15,000 = $22,500
Provided selling and distribution expense = $18,000
Variable = Sales commission of 5% on sales = $120,000 X 5% = $6,000
Fixed Selling expenses = $18,000 - variable $6,000 = $12,000
Manufacturing Overhead cost is completely fixed = $35,000
Now we have total manufacturing cost = material + labor + manufacturing overheads = $22,500 + $15,000 + $35,000 = $72,500
Total variable cost = Material + labor + Selling & Administration
= $22,500 + $15,000 + $6,000 = $43,500
Total fixed cost = Manufacturing + Selling & Administrative
= $35,000 + $12,000 = $47,000
Total contribution margin = Selling Value - Total Variable Cost = $120,000 - $43,500 = $76,500
Final Answer
1. Total manufacturing overhead cost = $35,000
2. Total Direct Material cost = $22,500
3. Total manufacturing cost = $72,500
4. Total Variable Selling and Administrative Cost = $6,000
5. Total variable cost = $43,500
6. Total Fixed Cost = $47,000
7. Total contribution margin = $76,500