Incremental/ Differential Cost for 100 Plastic Rings Production

Production Cost
Raw Material
Direct Labor
Manufacturing Overhead
Fixed OH
Variable OH
Incremental Cost to Produce 100 Plastic Rings

Production Cost
Raw Material
Direct Labor
Manufacturing Overhead
Fixed OH
Variable OH
Differential Cost to Produce 100 Plastic Rings

Plastic
Rings
4.20
15.60
55.74
12.48
88.02

Steel
Rings
76.65
46.80
37.44

Plastic
Difference
Rings
4.20
72.45
15.60
31.20
55.74
12.48

(55.74)
24.96
72.87

Incremental Cost for 34,500 Steel Rings Production (per 100 rings)
Production Cost
Direct Labor
Variable Overhead
Incremental Cost for 34,500 Steel
Rings (per 100 rings)

Steel Rings
14.04
11.23
25.27

Profit per 100 rings

Sales
Less: Variable Cost
Raw Materials
Direct Labor
Variable Manufacturing Overhead
Contribution Margin per 100 rings
Less: Fixed Cost
Fixed Manufacturing Overhead
S&A Expense
Additional Fixed Cost (Molds&Tooling)

Steel
325
76.65
46.80
37.44

160.89

Plastic
340
4.20
15.60
12.48

164.11
93.60
46.80
-

140.40

Profit

23.71

Useful Life Comparison

Useful Life
Profit/ Useful Life

1
23.71

32.28
307.72

31.20
15.60
55.74

102.54
205.18

4
51.30

Profit Steel Rings

Revenue
Sales ($3.25 x 59,950 units)
Expense
COGS ($1.61 x 59,950 units)
Profit

194,837.50
96,519.50
291,357.00

Profit Steel dan Plastic Rings

Revenue
Sales
Plastic Rings ($3.40 x 3,588 units)
Steel Rings ($3.25 x 56,362 units)
Expense (COGS)
Plastic Rings ($0.88 x 3,588 units)
Steel Rings ($1.61 x 56,362 units)
Profit

12,199.20
183,176.50
3,157.44
90,742.82
282,961.08