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Answer:
B. $ 3 comma 600 comma 000$3,600,000
Explanation:
The total manufacturing cost of an entity maybe divided into two broad classes. These are direct and indirect cost. The indirect cost are also known as the overheads and may be further divided into fixed and variable overheads. The variable overheads may be given as a function of direct cost such as machine hours, direct labor hours etc.
Given that
Total units to be produced = 120,000
Time required to produce a unit = 10 hours
Hence total number of hours required
= 120,000 × 10
= 1,200,000 hours
Hourly wage rate = $12
If Factory overheads is applied to direct labor hours at $3 per hour
Factory overheads = $3 × 1,200,000
= $3,600,000
Entrepreneurs are people who design, launch and run new businesses that are initially small with an aim of making profit. When entrepreneurs are bringing a new business or a new production method to the market they are innovating. Innovation is the process of implementing new idea or method of production in a business to create or increase value of a organization.
Answer:
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Explanation:
The basic theory illustrated in (Figure) is that, because of the existence of fixed costs in most production processes, in the first stages of production and subsequent sale of the products, the company will realize a loss. For example, assume that in an extreme case the company has fixed costs of ?20,000, a sales price of ?400 per unit and variable costs of ?250 per unit, and it sells no units. It would realize a loss of ?20,000 (the fixed costs) since it recognized no revenue or variable costs. This loss explains why the company’s cost graph recognized costs (in this example, ?20,000) even though there were no sales. If it subsequently sells units, the loss would be reduced by ?150 (the contribution margin) for each unit sold. This relationship will be continued until we reach the break-even point, where total revenue equals total costs. Once we reach the break-even point for each unit sold the company will realize an increase in profits of ?150.
For each additional unit sold, the loss typically is lessened until it reaches the break-even point. At this stage, the company is theoretically realizing neither a profit nor a loss. After the next sale beyond the break-even point, the company will begin to make a profit, and the profit will continue to increase as more units are sold. While there are exceptions and complications that could be incorporated, these are the general guidelines for break-even analysis.
As you can imagine, the concept of the break-even point applies to every business endeavor—manufacturing, retail, and service. Because of its universal applicability, it is a critical concept to managers, business owners, and accountants. When a company first starts out, it is important for the owners to know when their sales will be sufficient
Given the following parameters:
The employer pays the employee (gross earnings) – $1,200
The employer pays for social security and medicare taxes – $91.80
The employer pays for the Federal
Unemployment Tax Act (FUTA) – $9.60
The employer pays for the State
Unemployment Tax Act (SUTA) – $64.80
The total cost of this employee to the employer is the summation of all these costs
1,200 + 91.80 + 9.60 + 64.80 = $1366.20
