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