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Accounting: Contribution margin, overhead rate etc

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Below are two essay questions
Solve the following problems. Show all your calculations. You may use the space provided. (If you prefer to use Excel or add supplemental pages within this document, please clearly identify the problem number.)

12. Furniture, Inc., sells lamps for $30. The unit variable cost per lamp is $22. Fixed costs total $9,600.

Required:
a. What is the contribution margin per lamp?
b. What is the breakeven point in lamps?
c. How many lamps must be sold to earn a pretax income of $8,000?
d. What is the margin of safety, assuming 1,500 lamps are sold?
13. Jordan Company has two departments, X and Y. Overhead is applied based on direct labor cost in Department X and machine-hours in Department Y. The following additional information is available:

Budgeted Amounts Department X Department Y
Direct labor cost $180,000 $165,000
Factory overhead $225,000 $180,000
Machine-hours 51,000 mh 40,000 mh

Actual data for Job #10 Department X Department Y
Direct materials $10,000 $16,000
requisitioned
Direct labor cost $11,000 $14,000
Machine-hours 5,000 mh 3,000 mh

Required:
a. Compute the budgeted factory overhead rate for Department X.
b. Compute the budgeted factory overhead rate for Department Y.
c. What is the total overhead cost of Job 10?
d. If Job 10 consists of 50 units of product, what is the unit cost of this job?

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Solution Summary

The problems deal with accounting issues: contribution margin, overhead rate etc

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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