How do you find the net benefit in this? show the method Relevant Cost Amount Sales Revenue (12000 x $31.50) $378,000 Less: Direct Material (12000 x ($16.40-$4.20)) $146,400 Direct Labor (12000 x $4.50) $54,000 Variable Manufacturing Overhead (12000 x $7.50) (Notes) $90,000 Additional setup costs $8400 Special equipment cost $5800 Net benefit $73,400 Notes: Total manufacturing overhead rate $40 per hour Less: Fixed manufacturing overhead (1500000/60000) $25 per hour Variable manufacturing overhead $15 per hour Required machine hour for one unit is half-hour i.e. $7.5 per unit
How do you find the net benefit in this? show the method Relevant Cost Amount Sales Revenue (12000 x $31.50) $378,000 Less: Direct Material (12000 x ($16.40-$4.20)) $146,400 Direct Labor (12000 x $4.50) $54,000 Variable Manufacturing Overhead (12000 x $7.50) (Notes) $90,000 Additional setup costs $8400 Special equipment cost $5800 Net benefit $73,400 Notes: Total manufacturing overhead rate $40 per hour Less: Fixed manufacturing overhead (1500000/60000) $25 per hour Variable manufacturing overhead $15 per hour Required machine hour for one unit is half-hour i.e. $7.5 per unit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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How do you find the net benefit in this? show the method
| Relevant Cost | Amount |
| Sales Revenue (12000 x $31.50) | $378,000 |
| Less: | |
| Direct Material (12000 x ($16.40-$4.20)) | $146,400 |
| Direct Labor (12000 x $4.50) | $54,000 |
| Variable Manufacturing |
$90,000 |
| Additional setup costs | $8400 |
| Special equipment cost | $5800 |
| Net benefit | $73,400 |
Notes:
| Total manufacturing overhead rate | $40 per hour |
| Less: Fixed manufacturing overhead (1500000/60000) | $25 per hour |
| Variable manufacturing overhead | $15 per hour |
| Required machine hour for one unit is half-hour i.e. | $7.5 per unit |
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