Question

Miller Company’s total sales are $174,000. The company’s direct labor cost is $20,880, which represents 30% of its total conversion cost and 40% of its total prime cost. Its total selling and administrative expense is $26,100 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 Manufactoring Over head cost
	Direct labor cost	20,880
	Conversion Cost(%)	30%
	Total Conversion Cost	69,600
	Total Manufactoring Over head cost(69600-20880)	48,720
2	Direct Materal Cost
	Direct labor cost	20,880
	Prime Cost(%)	40%
	Total Prime Cost	52,200
	Direct Materal Cost(52200-20880)	31,320
3	Manufactoring cost
	Direct Materal Cost	31,320
	Direct labor cost	20,880
	Manufactoring Overhead cost	48,720
	Total Manufactoring cost	100,920
4	total selling and administrative expense	26,100
	Variable selling and administrative expense	8,700
	174000*5%
5	Total Variable expenses
	Direct Materal Cost	31,320
	Direct labor cost	20,880
	Variable selling and administrative expense	8,700
	Total	60,900
6	Manufactoring Overhead cost	48,720
	Fixed selling and administrative expense 26100-8700	17,400
	Total	66,120
7	Contribution margin
	Sales	174,000
	Less Variable cost	60,900
	Contribution margin	113,100