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    Brunswick & Malibu Boats: Contribution Margin, Job Costing

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    Brunswick Corporation sells bowling bags and has developed the following

    Sales revenue $2,500,000
    Variable cost of goods sold 65% of sales
    Fixed cost of goods sold $152,000
    Variable operating expenses 5% of sales
    Fixed operating expenses $518,000

    For the year ended December 31, 2016, Brunswick Corporation produced and
    sold 62,500 bowling bags.

    Instructions-show all computations

    (a) Prepare a detailed CVP income statement using the contribution margin
    format for Brunswick Corporation for 2016.
    (b) Compute the contribution margin per unit.
    (c) Compute the contribution margin ratio.
    (d) Compute the break-even point in dollars.
    (e) Compute the margin of safety in dollars.
    (f) Compute the margin of safety ratio.
    g) Compute the number of bowling bags to be sold to earn a target income
    of $383,000.

    Malibu Boats Inc. uses a job order cost accounting system and keeps perpetual inventory records. The following transactions occurred in the first month of operations:

    1. Purchased raw materials on account, $250,000.

    2. An analysis of the requisitions shows the following: Direct materials requisitioned during the month:

    Job 101 $30,000
    Job 102 29,000
    Job 103 40,000

    3. Factory labor costs incurred were $103,000 of which $90,000 pertained to factory wages payable and $13,000 pertained to employer payroll taxes payable.

    4. An analysis of the time tickets indicated the following: Direct labor
    incurred and charged to jobs during the month was:

    Job 101 $40,000
    Job 102 35,000
    Job 103 18,000

    5. Incurred manufacturing overhead costs as follows: indirect labor $10,000, indirect materials $8,000, and depreciation $11,000. Also, incurred $25,000 of manufacturing overhead costs on account.

    6. Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate based on 125% of direct labor costs.

    7. Job 101 and Job 103 were completed during the month. (Note: show your work in part b. below.)

    8. Job 101 was sold on account for $140,000.


    a. Prepare journal entries to record the above transactions.

    b. Compute the cost of Job 101, Job 102 and Job 103.

    c. Compute the balance in the Work-in-Process account at the end of the month.

    d. Compute the amount of over/under applied overhead.

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    Solution Summary

    The Solution uses excel sheets with visuals (t-accts) and income statement to explain the Brunswick & Malibu Boats examples.