5 05 contributionpermachinehour 468015284005 3120

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Unformatted text preview: 162,800 Contribution margin $ 22.80 $136,800 $46.80 $46,800 $28.40 $340,800 $524,400 Fixed costs Manufacturing overhead 36,000 Marketing & administrative costs 72,000 Fixed costs 108,000 Operating income $ 416,400 Machine‐hours per unit — 1.5 0.5 Contribution per machine‐hour ($46.80 ÷ 1.5; $28.40 ÷ 0.5) — $31.20 $56.80 1) Total fixed overhead = 5,000 pairs of skates x $21.60 = $108,000 Fixed marketing & administrative costs = $108,000 ‐ $36,000 = $72,000 Fixed manufacturing allocation rate = $36,000/7,500 mh = $4.80/mh Snowboard binding variable manufacturing overhead rate = $7.20 ‐ $4.80 = $2.40 2) $12.00 $7.20 = $4.80 3) $16.80 $7.20 = $9.60 6 11‐37 (cont’d) OmniSport Contribution Analysis Total Machine‐ Machine‐ Total Hours Hours Machine‐ Product per Used Hour Unit Contribution Quantity Unit (3)= Balance Contribution (6)= (1) (2) (1)(2) (4) (5) (1)(5) Machine‐hours available 7,500 Snowboard bindings 12,000 0.5 6,000 1,500 $28.40 $340,800 Skates (pairs)—manufacture 1,000 1.5 1,500 — 46.80 46,800 Skates (pairs)—purchase 6,000 — — — 22.80 136,800 Total contribution 524,400 Less original contribution (5,000 pairs of skates $46.80 per pair) (234,000) Improvement in contribution $290,400...
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