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3 December, 09:47

Michael's Machine Shop reports the following information for the quarter. Sales price $ 110 Fixed costs (for the quarter) Selling and administrative 47,780 Production 143,340 Variable cost (per unit) Materials 26 Labor 23 Plant supervision 16 Selling and administrative 17 Number of units (for the quarter) 23,890 units Required: Select the answer for each of the following costs. a. Variable cost per unit. b. Variable production cost per unit. c. Full cost per unit. d. Full absorption cost per unit. e. Prime cost per unit. f. Conversion cost per unit. g. Contribution margin per unit. h. Gross margin per unit.

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  1. 3 December, 10:10
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    Instructions are listed below

    Explanation:

    Giving the following information:

    Sales price = $110

    Fixed costs:

    Selling and administrative 47,780

    Production 143,340

    Variable cost (per unit):

    Materials 26

    Labor 23

    Plant supervision 16

    Selling and administrative 17

    Number of units (for the quarter) 23,890 units

    A) Variable cost per unit = Material + labor + moh

    Variable cost per unit = 26 + 23 + 16 + 17 = $82

    B) Variable production cost per unit = 143340/23890 = $6

    C) Total variable cost = 65 + 6 = $88

    D) Absorption cost = variable cost per unit + fixed cost per unit = 88 + (47780/23890) = 88 + 2 = $90

    E) Prime cost = direct material + direct labor = 26 + 23 = $49

    F) Conversion cost = direct labor + moh = 26 + 16 = $42

    G) Contribution margin = Price - variable cost = 110 - 88 = $22

    H) Gross margin = Price - absorption cost = $20
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