Question

Miller Company’s total sales are $123,000. The company’s direct labor cost is $14,760, which represents 30% of its total conversion cost and 40% of its total prime cost. Its total selling and administrative expense is $18,450 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. The total manufacturing overhead cost is $34,440.

2. The total direct material cost is $22,140.

3. The total manufacturing cost is $71,340.

4. The total variable selling and administrative cost is $6,150.

5. The total variable cost is $43,050.

6. The total fixed cost is $46,740.

7. The total contribution margin is $79,950.

Further Explanation:

Total manufacturing cost:

The total manufacturing cost is the total cost of producing a product. It includes the material cost, labor cost and other manufacturing overheads that are used in the production of the goods.

1. Total manufacturing overhead cost:

$\begin{aligned}\text{Manufacturing overhead}&=\text{Total conversion cost}-\text{Direct labor}\\&=\left\{\dfrac{\text{Direct labor}}{\text{Conversion rate}}\right\}-\text{Direct labor}\\&=\left\{\dfrac{\text{\ 14,760}}{\text{30\%}}\right\}-\text{\ 14,760}\\&=\ 34,440\end{aligned}$

Thus, the total manufacturing overhead cost is $34,440.

2. Total direct material cost:

$\begin{aligned}\text{Direct material}&=\text{Total prime cost}-\text{Direct labor}\\&=\left\{\dfrac{\text{Direct labor}}{\text{Conversion rate}}\right\}-\text{Direct labor}\\&=\left\{\dfrac{\text{\ 14,760}}{\text{40\%}}\right\}-\text{\ 14,760}\\&=\ 22,140\end{aligned}$

Thus, the total direct material cost is $22,140.

3. Total manufacturing cost:

$\begin{aligned}\text{Total manufacturing cost}&=\text{Direct materials}+\text{Direct labor}+\text{Manufacturing overhead}\\&=\ 22,140+\ 14,760+\ 34,440\\&= 71,340\end{aligned}$

Thus, the total manufacturing cost is $71,340.

4. Total variable selling and administrative cost:

$\begin{aligned}\text{Total variable selling and administrative cost}&=\text{Total sales}\times{\text{Sales commission rate}}\\&=\ 123,000\times{5}\%\\&=\ 6,150\end{aligned}$

Thus, the total variable selling and administrative cost is $6,150.

5. Total variable cost:

$\begin{aligned}\text{Total variable cost}&=\text{Direct materials}+\text{Direct labor}+\text{Salescommission}\\&=\ 22,140+\ 14,760+\ 6,150\\&=\ 43,050\end{aligned}$

Thus, the total variable cost is $43,050.

6. Total fixed cost:

$\begin{aligned}\text{Total fixed cost}&=\text{Manufacturing overhead}+\text{Fixed selling and administrative expense}\\&=\text{Manufacturing overhead}\\&\:\:\:\:+\text{[Total selling and administrative expense-Sales commission]}\\&=\ 34,440+[\ 18,450-\ 6,150]\\&=\ 46,740\end{aligned}$

Thus, the total fixed cost is $46,740.

7. Total contribution margin:

$\begin{aligned}\text{Total contribution margin}&=\text{Total sales}-\text{Total variable cost}\\&=\ 123,000-\ 43,050\\&=\ 79,950\end{aligned}$

Thus, the total contribution margin is $79,950.

Learn more:

1. Learn more about the product efficiency brainly.com/question/11936204
2. Learn more about the selection of the ideal alternate brainly.com/question/3692336
3. Learn more about the profit and loss from the bonds brainly.com/question/6909149  

Answer details:

Grade: Middle school

Subject: Cost accounting

Chapter: Cost allocation

Keywords: Miller, Company, total sales, direct labor cost, conversion cost, total prime cost,  selling and administrative expense, variable selling and administrative expense, sales commission, inventories, manufacturing overhead, fixed costs, total manufacturing overhead cost, direct materials cost, total manufacturing cost, total variable selling and administrative cost, variable cost,  fixed cost, contribution margin.

Answer 2

1.

Direct labor cost = $14760

This is 30% of total conversion cost so, conversion cost = 14760/30%

= $49200

Total conversion cost = Direct labor + Manufacturing overhead

Manufacturing overhead = Total conversion cost - Direct labor

=49200-14760 = $34440

Hence, The total manufacturing overhead cost= $34440

2.

Direct labor = $14760

This is 40% of prime cost. So total prime cost = 14760/40%

= $36900

Total prime cost = Direct material + Direct labor

Direct material = Total prime cost - Direct labor

= 36900 - 14760 = 22140

Hence, the total direct materials cost = $22140

3.

Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead

= 22140+14760+34440 = $71340

4.

Variable selling and administrative cost = 5% of 123000

=$ 6150

5.

Total variable cost = Direct materials + Direct labor + Sales commission

= 22140 + 14760 + 6150 =$43050

6.

Fixed selling and administrative expense = Total selling and administrative expense - Sales commission = 18450-6150 = $12300

Total fixed cost = Manufacturing overheads + Fixed selling and administrative expense

= 34440+12300 = $46740

7.

Total contribution margin = Sales - Total variable cost

= 123000 - 43050 = $79950