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Gold Coast Company's total revenues from sales are $147,000
Gold Coast Company's total revenues from sales are $147,000. Gold Coast's direct labor cost is $17.640, which represents 30% of its total conversion cost and 40% of its total prime cost. Its total selling and administrative expense is $22.050 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? 1 Total manufacturing overhead cost 2 Total direct materials cost 3 Total manufacturing cost 4 Total variable selling and administrative cost 5 Total variable cost Totalfixed cost 7 Total contribution margin
Expert Solution
1. Total manufacturing overhead cost (70% of conversion cost) = $17,640 / 30% * 70%
= $41,160
2. Total direct materials cost
Prime cost = Direct materials + Direct Labor cost
= $17,640 / 40%
= $44,100
Total direct materials cost = $44,100 - $17,640
= $26,460
3. Total manufacturing cost = Direct materials + Direct labor + Manufacturing overhead
= $26,460 + $17,640 + $41,160
= $85,260
4. Total variable selling and administrative cost = $147,000 * 5%
= $7,350
5. Total variable cost = Direct materials + Direct labor + Varaible selling and administrative cost
= $26,460 + $17,640 + $7,350
= $51,450
6. Total fixed cost = Manufacturing overhead + Fixed selling and administrative cost
= $41,160 + ($22,050 - $7,350)
= $55,860
7. Total contribution margin = Sales - Variable cost
= $147,000 - $51,450
= $95,550
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