Question: Calculation of contribution margin per unit & machine-hour for MD Widgets. MD Widgets manufactures three different product lines‚ Model X‚ Model Y‚ and Model Z. Considerable market demand exists for all models. The following per unit data apply: Model X Model Y Model Z Selling price $80 $90 $100 Direct materials $30 30 30 Direct labor ($10/hour) $15 15 20 Variable support
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an evaluation on his business. Andre has five barbers that work in the establishment and each employee received a salary of $9.90 per hour and works a 40-hour week and a 50-week year‚ regardless of the number of haircuts. As rent and other fixed expenses he expends $1‚750 every month‚ plus $ 0.40 as the cost of hair shampoo used on all his clients. This saloon is performing haircuts exclusively and each client paid a flat price of $ 12.00. He wanted for us to evaluate a new compensation method
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1. a.) Contribution per CD unit: Unit Selling Variable Costs $9.00 1.25 - .35 1.00 = $6.40 $6.40 b.) Break-even volume in CD units and dollars: ($275‚000 + 250‚000) / 6.40 = 82‚032 units 82‚032 * $9.00 = $738‚288 to break even c.) Net profit if 1 million CD’s sold: 1‚000‚000 * 6.40 = 6‚400‚000 6‚400‚000 525‚000 = $5‚875‚000 d.) Necessary
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method is in contrast to variable (or marginal or direct) costing‚ which attaches only variable costs to the manufactured output and charges the fixed costs to the accounting period (referenceforbusiness.com‚ n.d.). The page 50 income statement uses the absorption format. The page 33 income statement is set using a contribution format. The contribution format centers on the idea that each unit sold provides a certain amount of contribution margin that goes to covering fixed costs. In 2004 expenses
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In this case‚ full product costs will rarely be relevant. It is more likely that full product costs will be relevant costs for long-run pricing decisions. 12-3 Two examples of pricing decisions with a short-run focus: 1. Pricing for a one-time-only special order with no long-term implications. 2. Adjusting product mix and volume in a competitive market. 12-4 Activity-based costing helps managers in pricing decisions in two ways. 1. It gives managers more accurate product-cost information for
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Calculating the Contribution Margin Constance Hall Lindemann HCA 311 Health Care Financing & Information Systems July 1‚ 2012 Instructor: Heather Ables Contribution margin is nothing more than a way to see if an organizations operation is profitable. The costs for any business will fall into two broad categories: fixed costs and variable costs. Fixed costs are those whose amounts hardly ever change which means they are fixed‚ steady and unchangeable. Variable by contrast‚ are costs
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Work in process‚ December 31 | 18‚000 | Finished goods‚ January 1 | 60‚000 | Finished goods‚ December 31 | 48‚000 | Raw materials purchases | 1‚500‚000 | Direct labor | 690‚000 | Factory utilities | 225‚000 | Indirect labor | 75‚000 | Factory depreciation | 600‚000 | Selling and administrative expenses | 630‚000 | Direct materials used is | A) | $1‚590‚000. | B) | $1‚530‚000. | C) | $1‚500‚000. | D) | $1‚470‚000. | 4. | If the cost of goods manufactured is less than the
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materials‚ and charges of $4‚000 and $2‚000 for direct labor. From this information‚ it appears that the company is using a predetermined overhead rate‚ as a percentage of direct labor costs‚ of: A. 50% B. 200% C. 300% D. 20% 2. Job 607 was recently completed. The following data have been recorded on its job cost sheet: The company applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $14 per machine-hour. The total cost that would be recorded on
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1. Cost of goods manufactured will usually include: A. only direct labor and direct materials costs. B. some costs incurred during the prior period as well as costs incurred during the current period. C. only costs incurred during the current period. D. some period costs as well as some product costs. 2. During the month of August‚ direct labor cost totaled $13‚000 and direct labor cost was 20% of prime cost. If total manufacturing costs during August were $88‚000‚ the manufacturing overhead
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CASH FLOW DIRECT/INDIRECT 1. Given the following information and using the indirect method prepare the Cash Flows from Operating Activities section of the statement of cash flows. End of Year Beginning of Year Change Cash 23‚500 37‚400 (13‚900) Accounts receivable (net)
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