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Wander Case

The document compares the costs and profits of manufacturing and selling tackle boxes versus skateboards. Tackle boxes have a contribution margin of $14-33 per unit with direct labor hours of 1.25 per unit. Skateboards have a contribution per labor hour of $26.40 with direct labor hours of 0.5 per unit. Manufacturing overhead is calculated as $6.25 per tackle box and $2.50 per skateboard.

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mans
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78 views4 pages

Wander Case

The document compares the costs and profits of manufacturing and selling tackle boxes versus skateboards. Tackle boxes have a contribution margin of $14-33 per unit with direct labor hours of 1.25 per unit. Skateboards have a contribution per labor hour of $26.40 with direct labor hours of 0.5 per unit. Manufacturing overhead is calculated as $6.25 per tackle box and $2.50 per skateboard.

Uploaded by

mans
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Purchased Manufactured

Tackle Boxes Tackle Boxes

Selling Price 86.00 86.00

Less

Material -68.00 17.00

Direct Labor 18.75

Manufacturing Overhead -6.25

Selling & Admin Costs (4 = 10 - 6) (11.00 = 17 - 6)

Contribution Margin 14.00 33.00

Direct Labor hours per Unit 1.25 (see below)

Contribution per hour 26.40


ured

Skateboards Selling price per box……………………………………

45.00 Costs per box:

Molded plastic ………………………………….

(12.50=5.50+7) Hinges, latches, handle ……………………….

-7.50 Direct labor ($15.00 per hour) ………………..

-2.50 Manufacturing overhead ………………………

(3.00 = 9 - 6) Selling and administrative cost ……………….

19.50 Profit per box …………………………………………..

0.5 (see below) Manufacturing overhead ……………………… Calculation

39.00

Tackle boxes:
Direct-labor hours
Overhead per direct-labor hour
Capacity of Direct Labor hours

Total overhead

Total variable overhead

Variable overhead per hour

Variable overhead per box


Skateboards:
Direct Labor hours.

Variable overhead.
Selling price per skateboard
86.00 $45.00
………………………………..
Costs per skateboard:
Molded plastic
8.00 $5.50
………………………………………..

9.00 Wheels, hardware 7


……………………………………

18.75 Direct labor ($15.00 per hour) 7.5


………………………

12.50 Manufacturing overhead 5


…………………………….
Selling and administrative cost
17.00 …………………….. 9

Profit per skateboard


……………………………….………..

cturing overhead ……………………… Calculation

$18.75 / 15.00 = 1.25 hrs


$12.50 / 1.25 = $10.00
8,000 boxes x 1.25 =
10,000 hrs
10,000 hrs x $10/hr =
$100,000
$100,000 - $50,000 =
$50,000
$50,000 / 10,000 hrs =
$5.00/hr
$5.00/hr x 1.25 hrs =
$6.25

$7.50 / $15.00 = 0.5 hrs

$5.00/hr x 0.5 hrs = $2.50


34

$11.00

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